When we speak of the rise of the developing world, the discussion is China, China, China, and only recently India. Both nations are taking over the global spotlight as they have the strongest growth of any large economy in this recession. Yet with all this talk, people ignore the rise of South America's two largest countries: Argentina and Brazil.
Argentina, although not nearly as populated as Brazil, is a growing economy that has recovered well from its worst financial collapse only 8 years ago. The economy has expanded during this time, and although inflation is up, Argentines are not in a state of panic because they are still a semi-developed nation in terms of per-capita income. They currently have one of the largest per capita incomes in South America if not the largest. They have strong agricultural capabilities and have a larger consumption of meat per capita than even the US does. It also wouldn't be inaccurate to say that Argentina still has a working age population that isn't aging very drastically and it is a G-20 member. It is also incredibly resource rich and that can serve to help them very soon as Western Nations will need to turn to other sources (or as China finds them first)

Brazil has been growing at least 5% per annum since President Lula's first term. They have a large stock of raw materials that is drawing interest from industrial nations all across the world. They also have a relatively young working population with the ability to work for a long time to come. It also helps that they have nearly 200 million people to work in the labor force.

So perhaps we should focus our attention to include Latin America? I mean, China is going to be the next super power and India will follow shortly after. But Brazil is also a BRIC nation and Argentina is successfully rebuilding its financial sector.

Hindi-Chini-Bhai-Bhai is the phrase used to describe India and China as brothers. That was in the 1950s. By 1962, however, India and China went to war over land in Arunachal Pradesh. China wanted the mineral reserves in "Chinese South Tibet" and India vehemently claimed that the land was theirs as drawn by the McMahon Line. The line itself was terribly drawn and claimed a 10 km margin of error. Since then, India and China have had a rather turbulent relationship since.
Yet, there have been signs that perhaps the Asian rivalry could end and become an Asian cooperation. Pundits, so cleverly described this symbiosis as "Chindia." Both nations are part of the BRIC economic alliance in which India, China, Brazil, and Russia would come to dominate the global economy in the upcoming decades. Both nations have signed a 60 billion dollar trade agreement which serves as mutually beneficial. This is notable because in 1990, trade between the two countries was $270 million. Recently China also supported India's bid to join the UN Security Council as the 6th permanent member. So optimists point to this as a sign that relations between the Asian giants will be constructive.
Although there is this mutual agreement between the Chinese government and the Indian government, there is still the element of mistrust that haunts both of them. Because of recent events, Indian think tanks are convinced that China is using Pakistan and other Indian neighbors to stir up discord and essentially tie up India in South Asian affairs while China throws its weight into global matters. China would vehemently deny this but at the same time, we could see the motivation behind it.
India and China are both the fastest growing large economies in the world but for largely different reasons. China is viewed as the new industrial hub of the world and its large manufacturing sector is booming. Now that China has fixed its infrastructure, for the most part, efficiency has become key. Meanwhile, India has become more of the technology center and the place to do business. Some people could argue that India has simply "skipped" over the industrial phase leaving it about the same as in the 1990s. Although both economies are taking different approaches to development, they are still being compared.
Everyone believes that China is a more advanced society because it has a higher growth rate, greater amounts of trade with Western nations, a trade surplus, a brutal but effective government, and a superior education system. Most people believe that India will come up as second best to China in every aspect because infrastructure is not nearly as developed, education is limited, the government is discordant, and India has a trade deficit. Indians themselves debate whether or not they can catch or exceed China and many westerners believe that India has fallen too far behind, a view that the Chinese also take; however, India is starting to bridge the gap. India has a much younger and much larger labor force to pool from and the government has agreed to plan two massive "industrial corridors". One between Delhi (the capital) and Mumbai (the financial capital) and the other between Chennai (a manufacturing hub) and Bangalore( the rapidly developing IT hub). These corridors are meant to provide 3 million jobs to traditionally rural communities and establish necessary infrastructure between major cities; something, so far, China has been able to boast about. India also has a stable markets while economists are concerned that China may have developed its own housing bubble. India also seems to be a bit more active on investments into green technology. Already a pioneer in wind power, India is working towards developing better grid systems that would solve the power crisis that prevails in Indian cities.
While these are all good steps that are being taken, China still holds an excessive advantage in mostly every area. China has started to build up its military and it seems to have solved mostly all of its border disputes albeit the one with India. China also seems to be making friends with nations that are traditionally hostile to India and India seems to be taking notice. India has made agreements with developed economies like Japan and the United States for military training and manufacturing investments. There have also been proposed linkages between India and Vietnam. It seems as though the two Asian giants are going to be circling each other and appear to be making what was supposed to be a walkover for China into something of a contest between the tiger of South Asia and the dragon of the Far East.
I personally hope to see that these two nations cooperate because it will form the most powerful economic alliance of all time. however, time will have to tell.

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.

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.

For some reason I haven't gotten the most recent Economist issue so I'm stuck from the October 13th-27th. Most of the large economies have been in a slump but it seems like many of them are starting to come up. Recent figures suggest that productivity in the US increased by 10%. I think that by 2010 the whole unemployment problem will be somewhat resolved with maybe 6 % unemployed and productivity will continue to rise.

However, the same cannot be said of the EU. The large majority of countries experienced declines in production. Particularly France, Italy, and Sweden are experiencing deflation and rising unemployment with no real signs of exiting this recession. So much for Welfare-State superiority. If they want to stimulate growth and end this recession, the EU cannot simply hope to keep their low interest rates. Some fiscal policy needs to be enacted, particularly a cut in taxes might do the EU some good. Consumption will go up in these nations and the people will start to see prices rise, unemployment drop, and wages will return to normal.