Thursday, May 30, 2013

ObamaCare and GOP Arguments

Jonathan Chait, probably the most logical and ruthless voice of Progressives in America, attempts to find contradictions in GOP arguments against ObamaCare while battling challenges thrown by Tea Party. But may be we need more spoon feeding than what he undertook here.

Sure, it could be my fault that I do not understand intricacies rendered by Chait; but having said that, I have to admit that - his rebuttal does not make much sense (especially for the second point in his post).

GOP can perfectly maintain that "OK, health care costs are not inflating even if Republicans did not expect that to happen"; but:
- clearly the law which is yet to be implemented - ObamaCare - cannot have a hand in that; and
- precisely this healthy trend of reducing health care costs is sabotaged by ObamaCare and hence we should undo this law.

GOP can continue to argue "Look America, ObamaCare is actually going to increase health care costs and is going to effectively arrest the trend which otherwise would liberate America".

When I get potently compromised and provocative on purpose claims like this one from Real Clear Politics on my Facebook Wall; we know that GOP campaign of twisting reality of ObamaCare is in full swing.

What we need is Democrats to explain Americans that this trend of 'contained heath care cost' will be further encouraged by ObamaCare. I believe that is the case; but Politics of it demands that Progressives and Obama Administration are much more adroit in explaining all that than what they have been so far. 


Sunday, May 26, 2013

Corporate Income Tax

"we should replace lost corporate tax revenue with more taxes on the owners of capital, such as higher capital gains and dividend taxes or a shareholder-level tax on undistributed corporate profits.
In other words, instead of trying to tax Apple, we would tax its shareholders. Individual taxes are simpler than corporate taxes, and it's a lot harder for an individual to shift his tax residence, so we could expect less avoidance."


"Forget trying to make Apple pay higher taxes. How about if we don’t make them pay any taxes at all?"


I think what Barro and Klein are advocating here is the right policy prescription. 

Global understanding and agreement among nations to put a floor on Global Corporate Income tax is impossible to come by. Any legislature or political system which expects any such global agreement is simply naive, or even irresponsible. There are always going to be nations desperate enough to attract Global Corporation's profit for whatever advantage those profits bring and hence would be offering 'zero corporate income tax'. As Globalization entrenches more by every passing day, it implies open Trade and freer movement of Capital and Labor across borders - all of which enables corporations multiple ways to move 'profits' where it is taxed least or none. That is why it makes more sense to give up on this 'looser game' and simply focus on generating lost Corporate Income Tax revenue by taxing shareholders when dividends are paid or capital gains are accrued - which predominantly happen for high income tax payers.

This can be further modified by forcing Corporations to spend cash accumulated in certain time frame. Basically, within a reasonable time frame (2 to 5 years), Corporations have to spend overseas profit on one of the 3 things for no tax consequences:
- dividend payouts
- share buy back or
- board approved and executed investment plan within USA which starts within say 2 years and completes within 5 or 10 years.

If companies fail to invest profits back in USA, companies will be taxed no matter whether profit is brought back to USA or not. As far as companies which earn profit in USA, but are not incorporated in USA or do not have headquarters in USA; same reciprocity can be extended so long as their originating countries have 'no double taxation treaty' with USA. This treaty should be different than 'no double taxation treaty' for individuals. That way Congress can decide whether to enter into 'no corporate double taxation' with say Germany or not. If America and Germany agree for 'no corporate double taxation' it means essentially profit  investment back either in America or Germany should be non-taxable. This way Congress decides whether it is advantageous to enter into such a treaty with Germany based on profits of German companies in USA, profits of American companies in Germany and patterns of ploughing back those profits into respective economies. These treaties can be time bound too. Point is Congress would have the power to determine and calibrate needle on 'no corporate double taxation' treaties with other countries on ongoing basis.

The core objective of such reformed taxation should be to help companies invest back profits and so long as that happens, companies should not have to worry about any tax implications. And if that does not happens, regardless of where companies hoard that profit, those companies should be taxed. Bargain of 'no corporate taxation' rests on - recouping lost revenue from individual taxation, incentivizing corporations to invest back into economies and country by country trade understanding. 



Friday, May 24, 2013

Nocera or Ignatius?

"Watching Obama on Thursday, one sensed that he still has the smarts and savvy to lead the country out of its dysfunctional mess, which is surely why the country reelected him: So get on with it!"


"Whenever he talks about Guantánamo, the president gives the impression that that’s what he believes. The shame — his shame — is that, for all his soaring rhetoric, he has yet to show that he is willing to act on that belief."


Whom do I side with? Having backed Barack Hussain Obama in most cases even before he was the President and  through 'thick and thin' of his Presidency; I may be tempted to see Ignatius view point.

But I side with Nocera in these matters. I belive Joe Nocera more than President in this specific case.

I understand, most Americans would be be least interested in what happens to less than thousand prisoners on an island of Cuba. It is all justified and OK from a common American Perspective so long as 'terrorist attacks' on the homeland are avoided. 

But how can we avoid the basic reality that the security of this mighty nation America is independent of how much injustice our State does to those prisoners? Then why? Then where is the justification of denying even basic 'lawyer interaction' for these prisoners at Guantanamo prison? Forget Madison, Jefferson and all those lofty ideals. 

For all the erudite and wise public speech by President Obama; reality and his actions do not square with what 'walk the talk' requires this President to do.

Mr. President, be bold, listen to critics likes Joe Nocera and undertake what it needs to be done. 

That is your legacy Dear President. 

Tuesday, May 21, 2013

Spin and Heavy Handedness

Even though White House seems to have withered the first wave of 'scandal attack' and President Obama is able to retain his poll numbers, and quite possibly Republicans still would overplay 'scandal' card; there are few things Obama White House needs to watch for, needs to avoid. For example:

- One of the few 'fact checkers' which has gained credibility over last few years is Washington Post's Glenn Kessler. What Obama White House needs to do is avoid ratcheting the rhetoric and spin to a degree where it lands with multiple Pinocchio's; which is what certain claims of White House are looking now.

- Next, though President remains out of the loop of these revised updates of 'who knew when' (the precise fishing expedition White House wants to avoid) in case of IRS scandal; any revision of account with upward trajectory of 'knowledge at a time'; is no good. Again rules of damage control are very clear here - always come clean, come early and don't hide as much as possible so that any kind of subsequent 'revisionism' is avoided.

- When one of your backers in Media starts shouting 'foul'; you know that you have started to burn bridges with your supporters. That is no good.

So all in all, I would say even though the worst may be over; Obama White House still needs to be 'less on spin', needs to be much more forthcoming and avoid all sorts of controversies by being 'not heavy handed'. Obama White House needs to keep the focus on Economy and other issues of substance, avoid indulging in bravado like 'not spending more than 10% of time on scandals' (why talk about that? just keep doing your work, is that so hard?). Because that is where Obama Administration's strength lies as Economy holds up. 

Wednesday, May 15, 2013

Thrill is gone - Media to Obama

American Media wants to say 'thrill is gone' to President Obama when stories like below start appearing:

"The town is turning on President Obama – and this is very bad news for this White House. Republicans have waited five years for the moment to put the screws to Obama – and they have one-third of all congressional committees on the case now. Establishment Democrats, never big fans of this president to begin with, are starting to speak out. And reporters are tripping over themselves to condemn lies, bullying and shadiness in the Obama administration. 

Buy-in from all three D.C. stakeholders is an essential ingredient for a good old fashioned Washington pile-on — so get ready for bad stories and public scolding to pile-up." 

-- Politico 

[Yup, Media is indeed 'in' this - case in point NYT Editorial. It will be to non-traditional Media - bloggers? - to bring forth truth though some credible bloggers are warning about ominous signs too.] 

"He wants no control over the actions of his administration. As the president distances himself from the actions of “independent” figures within his administration, he’s creating a power vacuum in which lower officials behave as though anything goes. Certainly, a president can’t know what everybody in his administration is up to — but he can take responsibility, he can fire people and he can call a stop to foolish actions such as wholesale snooping into reporters’ phone calls." 


Precisely this urge that White House MUST be in control all the time about what a machinery of millions of Federal Employees do or events in far flung parts of Globe; that President Barack Obama needs to break. Yes, it is defeatist attitude in some sense, but how can you continue the farce of 'being in control' when 535 recalcitrant folks in Congress are simply not going to listen to you and are going to react to what they perceive 'their voters want'? This is all non-sense going in Washington. Truth is: 

"The Benghazi controversy has been going on for months and as far as I can tell, hasn’t moved public opinion on Obama or 2014 voting intentions one iota. The AP bugging scandal seems to involve a legitimate national security issue and, again, seems highly unlikely to undermine support for the president or influence voting intentions. And unless the president and/or some of his top aides are implicated in the IRS scandal, I seriously doubt that it will have any lasting impact either." 


Number of analysts have pointed out that there is no culpability to White House in Benghazi controversy, even though for sure it failed to be 'on top of things' in these matters. But that does not constitute any cover up or impeachable offense. For AP controversy, AG Holder has recused himself and he has strong reasons to undertake all possible security precautions - because Americans are paranoid about terrorism and they want Justice Department to pursue terrorism related investigations to the fullest extent. Otherwise these same Republicans, which are complaining now, would again criticize Obama Administration for being 'soft on security'.

And for IRS scandal, to fire folks before even knowing what exactly has happened, which laws are broken and who are responsible for all that; that is just plain non-sense. No matter how much these Media types 'inch' for President Obama to act now, to fire someone; the whole point is to 'break this cycle of scandal gossip driven politics'. 

When President Obama avoids any gimmicks, is ready to sustain cheap political lobs from his opposition but ready to follow through scrupulously all appropriate Federal Administrative improvement measures as well as hold accountable those who failed in their duties - that is much more appropriate response than this constant urge to remain ahead of 24x7 news cycle.

In all probability Republicans are going to overplay the 'scandal card'. That will be the exact time to remind Americans how Congress has made itself naked - chasing scandals excessively rather than working for well-being of Americans and their employment. That is the opening President Obama is going to get so long as he remains calm and does not succumb to Media Pressure even if few Democrats join the fray. There will be voices in Media asking President to undertake staff overhaul. But do we remember Bill Daley? He was supposed to bridge the gap between White House and GOP, Business Community? How far did it succeed? Again, point is not haste; but ensuring all the 'follow through' in each of these cases.

Tuesday, May 14, 2013

Syria

As I read Goldberg's commentary and other articles in Press, my understanding evolves  on this quandary which Obama Administration faces in Syria while civilian deaths mount. Where I am tending to differ what I said earlier is:

- How hard it will be for President Obama to 'regret few years' after Presidency about the failure to halt civilian deaths in Syria; but have then achieved the core objective of not entangling America in yet another global mess?

Yes, to say let civilian deaths continue without any intervention is absolutely an abhorrent way of conducting foreign policy. It goes against basic conscience of most decent folks. But then again, duty of President is to protect America and to serve interests of Americans first. In today's times, those are still served best by not getting involved in yet another foreign engagement. That is the 'call' of Obama Administration; more one thinks, it seems right.

There are number of other powerful reasons why Administration wants to be reticent in these matters. I list those not in any particular order:

1. The most basic reason seems to be that Administration is 'not sure' who are the folks who will succeed Assad Government. If those are Sunni extremists who are less amenable to American interests, what good it is to change the government? When these extremists gain power and start slaughtering Alawites and other non-Sunni sects in Syria (remember it has simply descended into a sectarian war at this stage); the same Media will hold Obama Administration responsible to stop those killings. At that point, Administration may have to undertake 'peace enforcing force on ground'. Once the imperatives of war start unfolding; there is not stopping back with more danger for spilling of American blood. The same cheerleaders who are holding this administration's feet to fire for non-intervention; will flip on dime and will start criticizing the administration for inevitably difficult chapters of any foreign intervention. 

2. Remember all the criticism Obama Administration received in extending tacit support to Muslim Brotherhood in Egypt (not that it had much of a winning hand in all other fractious Egyptian Opposition political groups)? Egyptian President Morsi was thought to be reasonable; but how reasonable has he turned out to be? What Egypt teaches here is unless America is sure about new incoming regime is solidly aligned with American interests and is capable of carrying its duties; it is essentially counter-productive to spend American blood and treasure in undertaking these costly and uncertain regime changes; no matter how anti-humanitarian that approach is. Administration should pursue global collective action (in conjunction with Russian, Europe, Turkey and UN) in stopping civilian killings, but it need not be a sole operation.

3. It also seems Israel is reasonably comfortable in the current state of affairs, in some sense. Having a strident Sunni regime in next door Syria is not easy for Israel whereas trouble maker Assad is fully bogged down in this civil war. The ensuing chaos helps Israel to undertake stealth or not so stealth attacks at will and that addresses its immediate security concerns. From Israeli perspective decreasing popularity of Hezbollah among Sunni Arabs, as it backs anti-Sunni Assad regime, is a good thing. 

So yes, as Zakaria pointed out; President made the mistake of 'loosely talking about red lines'; but that damage is far less compared to potential damage of entering Syrian quagmire for the sake of enforcing consequences of defying 'red lines'. Administration can wait until coming Iranian Elections. There is not much benefit in giving fillip to hard-liners in that election by a Syrian intervention on the cusp of that election. After the election, for a new Iranian President; there is a room to calibrate the Iranian response to Syrian conflict as well as to start responding to Western entreatments of abandoning nuke program. At that time, Administration will be in a better position to pursue inter-twined policies for Syria, Iran and Middle East with a lesser fog. 

Sunday, May 12, 2013

Deranged Bhagwati

Visceral hate of President Obama while succumbing to Bush Revisionism and urge to disparage Liberals for no reasons; all that has led Prof. Bhagwati to write this illogical column unsubstantiated by facts. Prof. Bhagwati praises George Bush but exactly misses core contributions of Bush to America - uniting the country after 9/11 attacks and never allowing 'war on terror' to be equated to 'war against Islam', precisely practicing Secularism as intended by America's Founding Fathers.

Prof Bhgwati starts by pointing outrage of Liberals against Bush's Iraq war. Rather than getting wrapped in 'talking points of political brawl'; we needed person of Prof. Bhagwati's stature to rise above the partisan rhetoric and point the historical context of how disastrous that war has been to America - trillions of dollars gone, thousands of Americans died, hundreds of thousands Iraqi's dead; all with diminished stature of America in World. We needed Prof. to understand reticence of this President in intervening in Syria considering consequences of 'ill-fated judgements of Bush'. Presidency is about making cardinal calls of War and Peace. On Obama's watch America is wrapping two wars, brought to justice main perpetrator of 9/11, propounded non-hawkish policy world over whereas George Bush started the wrong war - that is the reality. For Prof. to hide behind some shrill noises on ultra-Left is completely missing the forest for a tree.

Next, Prof. Bhagwati goes on blaming Obama for Doha Round Trade failure. Again facts are not with Prof. Why would the world - USA, Canada, Europe and other countries would allow adamant positions of India and refusal to open her markets while demanding others to do so? Why is Prof. not understanding complex political reality and inability of Indian Politicians in allowing retail corporations like WalMart in India? Why is Prof. not understanding that India remains ambivalent when it comes to retaining Internet Free and does not side completely with America who rightly works to protect business interests of Google, Facebook, other IT Giants as well as of common people? This is despite India's interest lies in nurturing Free Internet. India has more to loose by friending with Middle Eastern Islamic monarchies and non-democratic states like China who want State control on Internet in some form.

Internet, Retail Sector; these are just two examples where India's Trade position compounds Global Trade Talks. For Agriculture, Capital Markets and Services; it is not just USA with which India had issues. Global Trade talks like Doha Round are completely inter-tangled and there is no point in blaming one single country. It is give and talk and it is a collective responsibility.

May be Prof. Bhagwati is professionally vested in such uber trade talks by providing necessary intellectual framework. But that should not blind him from understanding what is wrong with such talks - complexity, requirement of large number of countries to accept rules simultaneously and simply irreconcilable 'interest structures' of global trade. Days of WTO led trade talks are over. Obama Administration is rightly coming to that realization. Meanwhile as many in Congress have been demanding more stringent action against outsourcing to India; Obama Administration has rightly hold the line where things are. Further, in coming Immigration debate, Administration has backed more liberal approach to immigration of skilled folks to America. That is more appropriate for America than tilting whole windmill to outsourcing. All in all this does not paint a picture of an Administration pursuing protectionist policies.

Prof. paints Obama Administration as beholden to Labor and hence opposing trade. He is wrong, exhibit A - America's trade deal with South Korea. Detroit and Auto-industry Labor were not so enthusiastic about the deal despite the very same American auto-industry Obama Administration saved on 'limb'. Politics dictated that Obama Administration listen to Labor; but President still pursued the deal and worked to get it passed in Congress. It is the same Administration which is pursuing two critical trade deals - one on Pacific side and the other with Europe. Given all what President Obama is investing in these trade talks,  berating a Democratic President for not pursuing International Trade is simply being a tool of Republican talking points and unbecoming of Prof. 

The final straw in Prof.'s utterly failing article comes when in his condescending tone he says:

"By contrast, despite his pro-immigration rhetoric aimed at the ill-informed, Hispanic vote, President Obama is guilty of the largest number of deportations of illegal immigrants during his first term."

To start with, who is he calling 'ill-informed'; the constituency which came out in throngs and delivered Florida, Colorado, Nevada to President Obama despite many pundits having doubts about Florida coming to Blues Column? Hispanics know exactly where their interests are - in not voting 'self-deportation' promoting anti-immigration Republican Party. Prof. is completely guilty of 'ivory tower' thinking here. Would he like Western Reporters calling 'Indian or Pakistani' voters 'ill-informed'? That has been the precise pride Indians have been having for decades - half ill-literate nation still making wise decisions about voting.

As far as deporting largest number of illegal immigrants - that is what George Bush's party is demanding. Bush did that, Obama is following that policy and here we have a dude who is complaining because Obama Administration is executing well! Besides it is an elemental politics that you prepare the ground by not giving an opportunity to Immigration Opponent by pointing 'but look, Obama is not enforcing laws on books'. But I guess to expect basic 'political sense' from an ivory tower intellectual is too much to expect. 

Reading some useless anecdotal incidences which Prof. talks in his article, it is clear that Prof. got infatuated by President George Bush and got blinded to 'think through' logically. (In Prof. Drezner's words, Prof. Bhagwati has got Tom Friedman Taxi Driver disease!) It seems as Hispanic community did not vote Republican, rather than understanding WHY; he simply throws hissyfits. When Prof. Bhagwati blames Obama and Clinton for 'border security' I wonder whether he bothers to even read news from Congress - how Republicans are pounding for more draconian measures. Ultimately, Prof. Bhagwati is one more example of victim of 'false equivalence' - he ignores how Republicans were more pro-immigration during Bush and that same party is so regressive when a Democrat tries to push Immigration. It is so sad that a Prof. who has lived so many years in USA cannot even notice basic political dynamics here and blames Obama. 

Immigration is a complex issue and there is every danger of high skill dominating Indian immigration group falling away from Hispanic Immigration which is the highest priority President Obama and America must address. It is not just a split between Indian High Skill Immigration versus Hispanic migrants; within Indian diaspora it is a further division between actual immigration versus 'outsourcing'. I thought with Prof. Bhagwati's high name recognition in Trade Scholarship, one would get a reasoned, deeply studied and nuanced analysis of what is in front of America. But here we got an article which is poisoning the well. Shame on Prof. Bhagwati.

Saturday, May 11, 2013

Pakistani Election

Results are not final and it will be a while before dust settles. So all this blogging is 'provisional' only.

It was a forgone conclusion that PPP would be thrown out of power. The state in which Pakistan as a nation finds itself - most public institutions broken, inability of Pakistani Army to spare resources for nation building, as like India Pakistani economy completely hobbled by Corruption and scant progress in eradicating feudal social structure decades after independence - it would have been hard for any single political party to bring about change in one term. I am not justifying PPP and its governance. Obviously, it was relatively an incompetent government. Day to day suffering of people would have hardly made Pakistani Voters to appreciate the fact that PPP government completed its full term. So it was very much expected that the first thing voters would do is throw away PPP.

The question of the election has been to what an extent Imran Khan would pull down Nawaz Sharif in becoming third time Prime Minister of Pakistan. Seems like Nawaz Shariff has pulled off this feat and the danger of Imran Khan completely spoiling Sharif's plot seems receding.

Needless to say, for Imran Khan this is a political graduation party. He has emphatically established his presence and presence of his ideas - notably, interest in removing corruption and demanding USA drone attacks on Pakistan soil stop altogether. Clearly it is going to be hard for the new government to allow any further USA drone attacks; at least initially. Obama Administration must be anticipating a strong push back from the new Pakistani Government for the continuation of drone program; if nothing else but for reasons of establishing bonafides of the new regime.

With the presence of resurgent Imran Khan in parliament and continued outside pressure from likes of Muhammad Tahir-ul-Qadri; Sharif government is bound to be weak. Quite possibly it may fall short of majority and may have to dependent on assortment of smaller parties to survive from one parliamentary session to another like how PV Narasimha Rao Government was in India. 

But exactly as the legacy of PV Narasimha Rao shows, a 'weak government' can make lasting changes too. Dr. Singh under the tutelage of PM Rao embarked Liberalization of Indian Economy and laid the foundation for changes unfolding for next two decades. If Sharif can achieve something like that - he has many of the needed ingredients like his business background - Pakistan can also get out of the grip of a broken economy.

Immediate well being of Pakistani people and stabilizing economy; those are the top priorities for the new government. Imran Khan would have been un-tested Captain there whereas in Sharif you have a seasoned player and captain. Of course he carries his baggage too - not so sterling record against corruption, presence of his younger brother in the party so as Nawaz Sharif attempting dynastic politics, no clarity with regards to how to deal with Pakistani Taliban and other sectarians in the country. No one can expect, in given circumstance, Pakistan to have a 'clean government'; able to solve myriad problems of the country in one single term. What we need from Sharif government is to provide basic stability (which at least PPP did by completing a term), keeping Army back in barracks without sucking all of Pakistan's meager resources, relieving Pakistani people from their current misery and lay the foundation for stronger economy. Problems like modernization of society or addressing endemic inequality; may wait. As economy opens and economic growth kicks in, inequality will actually increase. But all that price will be justified so long as day to day struggles of Pakistani people are addressed - lack of electricity, basic life security from terror attacks, inflation and jobs for people.

One thing going in favor of the new government is across the whole political spectrum, there is no appetite to increase any further tension with India. As Bloomberg Editorial argued in a surprisingly enlightened understanding of the sub-continent; indeed India will be a country to 'tango with'. For America, as her presence decreases in AfPak theater; working through India may have its advantages too though Sharif has friendly relations with American political establishment as well. Sharif's pro-business background and policies should find receptive ears in Republican Party to push aid and other Pakistan supportive policies through Congress. 

In general my sense is new Pakistani Government would not be adventurous in foreign policy area and will be lot engrossed with domestic politics. Pakistan does not need another Kargil. When Pakistani voters come down from the 'high' of effecting a peaceful and historic transfer of power and Pakistani people start facing realities of governance; disappointment is inevitable. It is not going to be easy for the new government to undertake reforms among population which is not necessarily used to do its share. For example - what happens when the new Government attempts to increase  abysmally low income tax collection? That is what IMF will demand when it advances a structural reform linked loan to Pakistan.

Nevertheless, preoccupation of a democratically elected government with its citizens is a good thing though. Pakistanis will be rightfully happy for that and the world will be glad too; a government by the people, for the people - in Pakistan.

Wednesday, May 08, 2013

Ryan Miscalculations and Opportunity for WH

“This was Ryan’s spiel.”


Basically Rep. Paul Ryan miscalculated in assuming Obama Economy will continue to be One Trillion Deficit per year economy as if President Obama was writing some hidden welfare checks all along. Rep. Ryan thought these Trillion Dollar deficits will continue and as such will provide an opportunity by late Spring to early Summer of 2013 to whack the Administration when White House would come to Congress on knees to increase the debt ceiling.

As things stand, we are potentially talking Fall of 2013 before Federal Government needing to increase the debt ceiling due to improving budget deficit. That throws out Rep. Paul Ryan's game plan of forcing Obama Administration in submission to fulfill Republican Budget Fantasies by Spring. Seems like Ryan fantasies are not going to realize after all.

As I have been saying, the basic problem for Obama White House is 'how do you maintain the combative posture against GOP while courting GOP for any kind of bi-partisanship before 2013 folds and electioneering of 2014 takes hold'. 

Part of the solution is for President Obama to argue - as facts are with him now - that whenever Congress decides to 'cool down and ditches its habit of governance by crisis'; American Economy holds up. Just to say folks,  that is little bit of easy to your Johny Commoner. 

Come on, Rep. Paul Ryan; you can spare some economic stability and economic predictability while you are fighting tooth and nail failure of your anti-Keynesian Economic Theories. How about helping Common Americans once in while and to undertake the normal politicking of Congressional  'give and take'?

That is what we need from President Obama - the grand daddy shaming his opponents by showering 'love' and daring them to cross interests of common Americans, now that it is evident what a 'governance by crisis' free economy looks like.

Friday, May 03, 2013

Bangladesh Tragedies

While Labor and Progressives mount pressure on Western Garment Labels to do more in stopping continued disasters in Bangladesh garment factories, ugly side of globalization is surfacing up. The core responsibility of these tragedies squarely lies with Bangladesh Government, its socio-economic structure, powerful interests of garment export houses and the culture of Bangladesh.

Bangladesh is one of the poorest nations in the world. It is very densely populated in a restricted habitable region with constant battle against nature - typhoons.  Its national history is short and its birth in 1971 is through a mass tragedy where millions were displaced and around half million civilians were killed. With such traumatic birth pangs and subsequent continued poverty in the liberated nation, socially 'value of Life' in Bangladeshi culture is very low. Centuries of feudal structure, grinding poverty and constant influence of outside powers (British, Indians and now may be China too); have resulted in 'high tolerance to misery' in Bangladeshi population. In short, 'deaths are dime a dozen; so what is the big deal'? - that is the attitude.  It is the Bangladeshi elite, its diaspora and its rulers who need to work to change this culture. It is difficult to judge how far such efforts are taking a root or if those are simply non-existent. But considering the spate of tragedies  it seems a pessimistic situation - i.e. no serious efforts are underway to fundamentally alter the 'culture of accepting such avoidable deaths'.

Traditionally, eradication of poverty and overall prosperity are potent solutions in reducing this culture of 'no value of Life'. Global Garment exports (because China is no more a profitable outsourcing place), relative political stability in recent years, prosperity across the border in India and friendly gestures from China; all those things have helped to bring some bounty to Bangladesh. But the income distribution is extremely skewed. As a result, incentives for 'labor safety' are not at all aligned. Combined with this inequality, entrenching electoral politics have made it very easy for these export houses to 'procure necessary political influence' in continuing 'abuse of Labor'. That is where the core political failure of Bangladeshi rulers is. Garment factory accidents continue to happen because Bangladeshi PM and her cabinet is least interested in taking on the corroding influence of these garment export houses. When few of your own cabinet members are either garment exporters themselves or beholden to these interest groups; you are unlikely to do anything unless you are an astute politician genuinely knowing what needs to be done for the overall welfare of people. This is not an issue only for the ruling party. Same will be the situation with the  Opposition Party too. Essentially across the entire political spectrum corrupting influence of garment export houses is pervasive.

It is not just one industry, but as like neighboring India; all pervading Corruption basically 'saps' any ability of Bangladesh to halt such human tragedies and take basic steps of governance. Tragedies in Bangladesh are consequences of South Asian scourge of Corruption and Crisis of Governance. Faulty and flashy success of Indian Democracy has helped to spread a wrong headed view of democracy in South Asia - democracy is simply equated to winning elections by any means and thereafter in most cases rulers think that as a 'license' to loot the state and continue the exploitation of weaker sections of society without any inclination towards welfare of common people. Agreed, not all politicians are like that in South Asian democracies. But there is preponderance of such politicians across the board.

Given all this and endemic all encompassing corruption, primary job of stopping Labor abuse is with Bangladeshi Government. Global Garment Brands are there to make money, those are answerable to their shareholders while Global Corporate Structure is not created to cater the welfare of poor people. It is not the job of Disney to have the 'factory inspected' and to validate enforcement of 'labor safety practices'. It is the job of factory owners and local authorities. When an outsourcing firm comes to your shore as a customer, the basic commercial premise is all these enforcement and safety issues are handled by factory owners, local government and national governments. Who better to look after  interests of Bangladeshi people apart from their own government? It is not Disney or Gap.

No one is suggesting that these garment labels do not pay more so as some 'margin' is left to pay for basic safety and sound infrastructure. These global brands can also 'incentivize' their payments to outsourcing firms based on how well they treat their workers. Instead of all that, the rush is to give money to families of victims to hush their voices or legally binding techniques to force these commercial organizations into 'welfare arrangements at remote places'. Disneys and Gaps of the world cannot be NGOs to engage with Bangladeshi workers.

Hence, the response of Disney - to simply run away from Bangladesh - seems one credible way out. True, Bangladeshi workers are going to suffer either ways - in absence of corruption free government due to 'collapsing garment factories' or by starvation otherwise because of lack of gainful employment. But at least Western companies and their consumers will not be 'party' to such human tragedies when they do not source from Bangladesh!

There are other countries which can step up to grab the market share - Vietnam, Cambodia, Thailand, etc. But there is no guarantee that same problems will not arise there too even though Bangladeshi style 'disregard towards Life' may be less prevalent in those societies.

With more Media awareness and continued tighter globalization, it is going to be harder for an outsourcer to ignore such abuses happening at other end of a supply chain. Global Corporations will be  forced to go away from nations which are incapable of getting their house in order. Bangladesh is one such nation and inevitably it will loose the outsourcing market share. Globalized Capitalism is not structured to cater to governing needs of poor population across the globe. That is the job of political structures. Unless these political systems in  poor countries get their house in order, everything else is going to be simply a band aid.