Tuesday, July 13, 2010

With the November mid-term elections approaching fast upon us, there is a great deal of uncertainty regarding the effectiveness of the president's initiatives. So far, President Obama has been able to pass some of his initiatives with the help of a large Democratic majority in both houses.

Healthcare: C.
Although this was a political victory for the Obama Administration, many people are still concerned about what healthcare will entail for them. Most of the senators (both for and against) the legislation didn't fully understand it. If I were to guess the percentage of people who have actually read the bill, I would estimate that only 2% of all opinionated voters actually took the time to peruse through it. For the most part, healthcare is a large gray area and the amount of time it took the administration to pass the bill does not create a great image for a political victory.

Economics (2 parts to this)
Relief and Recovery: C.
The American Reinvestment and Recovery Act was designed to plug in 800 billion dollars of stimulus money into major infrastructural projects and towards failing banks to clear their toxic assets. Keynesian Theory suggests that government pump-priming should bring the economy out of a slump; however, consumer confidence is still low leading to limited spending and thus stunted growth for business. Although the unemployment rate stopped rising, it hasn't fallen yet after two years. This recession maybe rather large but it certainly isn't so severe that unemployment has to remain above 9%. Spending is probably not the answer as the result always tends to balance itself out.

Reform: D.
The timing on this initiative is incredibly poor. Yes some Wall Street executives need to take responsibility, but not all of them. Financial reform and regulation will only introduce harsher measures on both big and small businesses which will keep consumer confidence low and eventually take an incredibly long time to recover from. If businessman are optimistic, then consumers will also be willing to spend. Both events will eventually lead to a faster recovery. Unfortunately though, the numbers are not suggesting that this is the time to push for regulation and responsibility. Therefore Obama should wait.

Budget Control: F
I never really bought the whole notion that a government could cut taxes and cut spending to keep the budget balanced. President Obama is certainly not convincing me otherwise with the excessive spending. With the bailouts and stimulus packages passed, I expected a very high budget deficit of 1.5 trillion dollars and I thought that this was merely a ploy to stimulate the economy. The budget for 2010 is very alarming indeed as it called for a 3.8 trillion dollar budget. With a war in Afghanistan and increased social security benefits and rising national defense totals, this budget control is turning out to be an abject failure. The Bush tax cuts are about to expire in a time where the consumers are not ready to face tax increases. Although many people won't be severely affected by the expiration, it does not do anything positive to increase taxes.

The War in Afghanistan: A.
The Obama administration has come under criticism for continuing to remain in Afghanistan. I think the war itself is putting an unnecessary strain on our budget; however, the rate of insurgency and extremism is starting to fall and the results are becoming favorable. It is believed that 50-100 Al-Qaeda members are at large which is a very promising number. Stanley McChrystal, who infamously criticized the Obama administration on its handling, is now dismissed. The ideal path would be to somehow take down the philosophical means by which Al-Qaeda thrives but in this way, the Obama administration has achieved somewhat of a success.

Wednesday, July 7, 2010

An Indian Progressive Era? India’s Democracy and the parallels with 19th century America.

Entering its 64th year as a democracy, India has come a long way from a nation that was barely prepared to self-govern. Today India aspires to become a superpower having already reached the trillion dollar mark as a total economy, complemented by a rising middle class, a growing commercial sector, a large inflow of capital, and a growing influence in Asia and in the world.
However, despite all of the major progress, India is still far away from officially reaching superpower status. There exists extensive poverty, excessive corruption among top officials at the federal and state levels, religious tensions between Hindus and Muslims, tensions with Pakistan and other Muslim neighbors, and a lack of development in the rural areas. The masses of people in rural villages are still without a consistent supply of electricity, without education, and without a stable food supply. In the cities there is also an insufficient water supply, a high cost of living, a rapidly growing population, and consistent rolling blackouts. In addition, there are several corrupt officials who are in charge of several key states.
Yet, all of these pressing issues on an aspirant superpower are not new. It is often cliché to say that history repeats itself but in India’s case, there is a striking parallel between its democracy and that of early America. Many issues of present-day India were common to America when it was a relatively young nation in the 18th and 19th century.
Both America and India were founded based on similar ideologies. Both nations wanted to gain independent status from Britain and the movement was widely accepted by the people in both nations. The elected representatives of both nations had a progressive belief in mind when they were agreeing upon a constitution. Many important figures in America’s 18th century government were people who shared beliefs on what direction the country should take. While there was a clashing of opinion, America remained as a single party state for a brief period of time as its people unanimously elected George Washington as an executive leader who served 2 terms as America’s president. India elected Pandit Nehru as its leader in 1947. Nehru was re-elected until his death in 1964. Following Washington’s term, there was an Era of Good Feelings which was a period of unity with new presidents who became national leaders. The US had dynamic figures such as Thomas Jefferson and James Madison, who both led the nation to increased prosperity and global recognition. Post-Nehru India saw the rise of Indira Gandhi who established India as a self-sufficient agrarian nation. While America experienced a lot of prosperity there existed an array of new problems. First, America was an infant nation that was virtually isolated and incapable of withstanding future invasions by the superior European armies. The only reason why they avoided invasions from stronger European powers was that the Europeans had found other areas of profitability in the world. On a similar note, India took advantage of Britain’s economic stress, during the Second World War, by pressing for independence. In truth, newly independent India was probably unable to protect itself from Western exploitation had the West not been occupied with containing the spread of Communism. As a second problem for America, its leaders became corrupt after the Revolutionary-War-generation had gone into retirement from politics. America began to pick war-heroes such as Andrew Jackson, William Henry Harrison, and Ulysses S. Grant – all of whom had little real sense of political expertise –to lead the nation. Jackson appointed criminals who had supported his campaign to high offices which was dubbed by critics as the Spoils System. William Henry Harrison died shortly after taking office and US. Grant tried to deal with widespread graft until he found out that his own officials were part of the corrupt bargain as well. Not only were the elected officials corrupt, but also the Southern aristocratic farmers who manipulated officials to allow black bondage even after slavery was legally abolished. City officials used tax revenue to buy houses for members of their party and they also bought out immigrant votes by providing work for the newly arrived.
Similarly, India had several impending issues to deal with upon its independence in 1947. Indira Gandhi faced numerous corruption allegations and during the Permit Raj era, many people disguised themselves as government officials and took bribes to offer permits for commerce and industry. The Indian police force is currently filled with many officers who have taken bribes before and they usually allow criminal activity to take place as long as the criminals can pay the police to ignore their activities. At the state level several top officials in India face corruption charges. While several charges have not been proven, many chief ministers and their influential supporters have been accused of corruption but there has been little action taken to address these issues.
Not only do America and India have political parallels, but they also have economic parallels. The 19th century in America was an era of great expansion since the Industrial Revolution was just beginning in the Western World. America imposed severe tariffs in order to protect its young industry. America also suffered from periods of inflation but since it kept the dollar at a gold standard, it was allowed to deflate as well. Similar to 19th century America, India has also experienced an impressive sustained growth of 7% since 1997, but India also imposes heavy tariffs in order to protect its industry. India also controls the rupee’s value, without pegging it, by comparing its exchange rate with the US dollar. America was able to export significant amounts and its government collected revenue largely from tariffs. Similarly, India has a wide-open export market for cash crops and tariffs serve as a significant source of revenue for the government. But at the same time, tariffs also serve as significant barriers to the consumer mentality that arises with a growing middle class. India charges among the highest tariff rates in the world to the benefit of its domestic industries; however, India has a much larger population and thus more people are hurt by the higher tariffs than are helped. The middle class cannot grow and expand without the ability to consume. America faced a similar problem and faced significant political and economic instability after abominable tariffs were imposed. Eventually, American officials agreed to lower tariffs in place of a higher income tax. Likewise, India should eventually lower its tariff rates when its industries “mature”. India significantly discourages labor unions just as America once did during the 1800s. America used to have sweatshops, demanding working hours, child labor, and limited leisure hours for workers coupled with extremely minimal wages. Contemporary India uses child labor, has demanding working hours, and low wages in comparison to the rest of the world. While the cheap labor that India has instigated waves of outsourcing which have fueled India’s job sectors, the growth will eventually stop as developed nations will have to find other means of producing. 19th century America realized that the low wages were severely inhibiting technological progress as witnessed by years of war and competition with Britain’s industrial economy. America promoted incentives by raising wages and allowing the stabilizing effect of union existence to come about.
In both political and economical aspects, Both America and India have experienced the positives and the negatives of both sides. However, America has managed to transcend most of the issues that crippled its economic and political prosperity when the Progressive Era arrived. People from all walks of life in America whether it was Democrats, Suffragettes, Republicans, Temperance Advocates, journalists, and child labor opponents all attempted to reveal the many underlying problems in America at the time. Politically divided people came together to oust corrupt officials at the mayoral, gubernatorial, senatorial, and eventually the presidential levels. By electing these leaders, corruption was halted, overall welfare was promoted, direct democracy became stronger and literacy went up. Tariffs were cut from the exorbitant rate of 33% and free trade was promoted, and even efforts towards conservation were taken when presidents such as Theodore Roosevelt and Woodrow Wilson took office. Not only did these presidents do what was right domestically, they asserted America’s power on the global stage.
Given that 19th century America and present day India are quite parallel to each other, the objective for India must now be to jumpstart its own progressive era. The questions cannot be will it or when will it come but rather how the era will come and what will it accomplish. India has the necessary tools to start a movement. It has powerful and influential media, a young, liberal population, and a growing presence of western ideas trying to integrate with traditional Indian values. The key for progress in India will need to be a specific combination of Western values plus an urge to effect change. If there are movements to end religious violence, corruption, caste discrimination, caste politics, sacrilege, illiteracy, gender discrimination, etc. India should welcome the change for what it can bring to nationwide prosperity and not the political opportunity that they could present. If there are movements to counteract terrorism aggressively, leaders cannot sit back idly hoping that other governments will intervene in their favor. It is up to India to make progressive choices that will ultimately benefit its entire population. Only then can India fulfill its aspirations of becoming a global superpower. The advantages of leading a progressive movement will be seen in the long run when India will be in a race for global economic control with China and America but now is the time where India can gain political and moral prestige in addition to their current economic thrust.