A friend called to say that the superpower post was too oblique. There was a need to explain. So here goes.
The post was aimed primarily at those concerned by Barack Obama’s campaign promise to ‘do something’ to discourage outsourcing and encourage local employment. This was to be done through tax incentives because in a market economy not much else is available to the U.S. government.
Also inspired by
Back to Obama. This is one area where there is not much that he can do or will want to do. In fact in a global downturn more and more companies will look to shave costs to survive. Tax incentives can’t help because the corporate tax rate is lower than the cost differential. And Indian costs can be reduced from current levels by about 50%.
Given job loss or pay cut everyone will opt for the latter. Lower income differentials and less social tension all round. My cardiologist might start earning more than my semi-literate uneducated phone banker once again.
As far as superpowers are concerned, the real power lies not in Indian Navy shooting at a few unemployed people playing pirates with toy guns off the coast of Somalia or in the ability of the good Dr. Singh to switch off the phone lines to America.
Real power lies with buyers and sellers of goods and services who can dictate pricing for what they buy, think Nike, and also for what they sell, think Boeing. This, dear reader, comes from creating products and services others want and covet. And then getting slave labour, by whatever name called, to make those in sweatshops of China or deliver from cubicle pits of India.
Previous: The Real Superpower
The post was aimed primarily at those concerned by Barack Obama’s campaign promise to ‘do something’ to discourage outsourcing and encourage local employment. This was to be done through tax incentives because in a market economy not much else is available to the U.S. government.
Also inspired by
- Those who keep talking about India as an emerging superpower when a large percentage of people (exact numbers are irrelevant) go hungry to bed, children go without education, sick go without healthcare, elderly have no financial security etc. You know the list. We could make a substantial difference just by stopping collection of data on poverty and wasting time and money on debates and conferences about what actually constitutes poverty. And diverting the money to improving any of the many areas crying for resources.
- The Thackeray clan’s fulminations against those who come seeking a living in Bombay. South Indians earlier and north Indians now, doing jobs no one else really wants. Gujaratis and Parsis who create jobs are never targeted.
- And finally, by the HDFC life insurance advertisement where a bald man seems to be planning to send his wife to Singapore to work as a maid. Because HDFC life insurance did not exist when he was working and should have started a retirement plan!
Back to Obama. This is one area where there is not much that he can do or will want to do. In fact in a global downturn more and more companies will look to shave costs to survive. Tax incentives can’t help because the corporate tax rate is lower than the cost differential. And Indian costs can be reduced from current levels by about 50%.
Given job loss or pay cut everyone will opt for the latter. Lower income differentials and less social tension all round. My cardiologist might start earning more than my semi-literate uneducated phone banker once again.
As far as superpowers are concerned, the real power lies not in Indian Navy shooting at a few unemployed people playing pirates with toy guns off the coast of Somalia or in the ability of the good Dr. Singh to switch off the phone lines to America.
Real power lies with buyers and sellers of goods and services who can dictate pricing for what they buy, think Nike, and also for what they sell, think Boeing. This, dear reader, comes from creating products and services others want and covet. And then getting slave labour, by whatever name called, to make those in sweatshops of China or deliver from cubicle pits of India.
Previous: The Real Superpower
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