US-India-relationship
Business, Finance, Politics, Public Issues

US and India Relations – A tale of two democracies

(One more guest article by Ankur Singh . You can read his previous article here. Ankur will soon start writing on Strat.in as a regular author. Do you want to write on Strat.in too? Read this for details )

US and India Relations – A tale of two democracies –

Democracy, as its meaning suggests, is all focused for the welfare of people. And its two most celebrated practitioners are India and the US. Both are the world’s largest democracies with plural societies tolerant of diversity. However, both of them are now bound on a journey that may twist the very fabric of this system.

The social and political conditions in both countries have never been amazingly similar as they are now. Both countries have witnessed a nation-wide public movement (Lokpal and Occupy Wall Street). Both the governments are struggling with economic and financial problems. Important elections are due next year in both countries. And finally, governments of both countries are entrapped in a mire of allegations and stalemates.

Let’s start with US. The government formed a super-committee that had representatives from both republican and democratic party who were expected to suggest a solution to the debt crisis of the country. It was also decided that the suggestions made would bypass the conventional rigmarole and would be implemented expeditiously. However, the committee tossed up its hands on 21st November and left millions of Americans disgusted.

Now let’s see the Indian scenario. A few days before, key industrialists like Mukesh Ambani & Ratan Tata emphasized on fast decision-making on the part of government. This statement was made in front of representatives from both Congress and BJP. However, our parliament seems unperturbed. The 1st two days of winter session of Parliament have been disrupted by opposition  with no significant output. Plethora of reforms (some good and some adequate) are lying in the pipeline. But neither our responsible government nor the constructive opposition have accomplished anything.

The reason for stalemate in both countries is the lack of social responsibility on the part of politicians. As the elections are close, the opposition parties could not let the government get their policies right. That could mean severe damage to the vote-banks. I am sure that similar thing will happen if the parties’ positions are swapped (ruling party becomes opposition and vice-versa). This vicious cycle may go on leading to delay in a number of welfare schemes over the decades. However, none of the parties are violating any rule of democracy. So, we can’t complain.

So did our constitution-framers made a mistake? Should we resort to system like that of China which is undemocratic and partially capitalist but has yielded much better growth results than both US and India? Perhaps not. Perhaps, the current events may just be once in a while scenarios. But the current situation definitely calls for some changes in the decision making. “What those changes could be” is an open question. Please express yourselves on this issue. Notes from the Editor: This is an article contributed by Ankur Singh – A guest strater. Ankur works as aStrategy and Operations Analyst with Deloitte Consulting and studied at Indian Institute of Technology, Delhi earlier. The article serves as an eye opener about the value added by Engineering Entrance Exam coaching centers in the Indian Education Ecosystem. We look forward to more insights from Ankur in the coming months. Also, the views expressed are author’s own and Strat.in neither supports or opposes them. Strat.in is a forum for thought provoking discussions and will continue to remain so.

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Planning, Politics

US- China Trade Relations: Lessons from History

This post is the first post by Saurabh Sunil, currently studying at IIM Calcutta. He has been helping us with our web-design and strat.in gladly welcomes him in its fold.

A hundred years ago, in the first age of globalisation, many investors thought there was a symbiotic relationship between the world’s financial centre, Britain, and continental Europe’s most dynamic industrial economy. That economy was Germany’s. Then as today, there was a fine line between symbiosis and rivalry. – Niall Ferguson, The Ascent of Money

In the early 20th century, Germany was becoming very prosperous. The country already had its territorial ambitions. However, with the unification of Germany happening as late as 1871, the country had missed the imperialist bus. This meant that the country would have to capture some other empire’s colonies. The scramble for a series of alliances followed. In 1879, Germany formed the Double Alliance with Austria-Hungary. In 1882, it was made into a Triple Alliance with Italy included. Around a decade later, Franco-Russian Alliance was formed. This was followed by Entente Cordiale, Anglo-Russian Entente and Triple Entente. The world was set for a war in 1914.

The analogy for the early 21st century would undoubtedly be US-China. Just like UK-Germany, China produces things which the US buys. With the money, China directly or indirectly buys the dollar bonds. So the US (govt. and the citizens) could keep splurging and the Chinese could keep hoarding the dollar. It has been a brilliant symbiotic relationship. But what happens when the Dollar that China keeps hoarding starts losing its value?
It is then that the SDR and other such things crop up. Countries want the dollar to be removed from the reserve currency status. They say that instead of the Dollar, the SDR (which essentially is a mix of four currencies) should be made the reserve currency. So the Americans respond by saying that the dollar should remain the reserve currency. They concur that China could always sell dollars to buy the currencies in the ratio of the SDR. But then, the value of Dollar would fall further. But then, isn’t that China’s problem. They chose to not diversify their currency portfolio. The Americans should not be paying for China’s investment mistakes.

But essentially the issue is a bit different. If you want to buy oil, you better pay up in dollars. After the World War II, the US ensured such treaties. Now it keeps cuddling Saudi monarchs and other oil rich nations. Gulf War was about oil. It should not come as a surprise that China has been scouting for oil all across Africa (which has largely been untouched by the US treaties).

The reason behind explaining this meandering geo-political issue was to explain the similarity to the early 20th century. The world’s financial centre, US seems to be in a symbiotic relationship with the world’s industrial centre, China. However, this symbiosis is tenuous at best. In early 20th century, wars were for territorial ambition and pride. In the 21st century, wars would be for natural resource needs. The first sparks of conflict can already be seen. One hopes that the international consensus averts any such future. Let’s hope that we learn our lessons from History.

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