Sunday, January 30, 2011

Why Chin-dia cannot be world superpowers

In today's post-recession scenario, China is out-innovating, out-building and out-educating the world. The question Barack Obama put forth to his fellow citizens at The State of the Union - can America out-innovate, out-build, and out-educate the world (or more precisely, China)? 

Maybe, maybe not. 
But thats irrelevant to who-ends-up-being-the-next-superpower.

To go a little deeper, lets have a look at a little bit of history.

Great Britain and her navy successfully ruled the world and its seas for almost two-hundred years. Her explorers dominated land in every direction, east, west, north and south. They opened the world for British markets - and therefore created one of the most robust economies in the time. Her armed forces (mainly, naval) were most feared and quite invincible.
Then came the wars. The Great War of 1914 (better known as World War I) and the World War II. Both of these events drained her economy; during the war of 1914, Great Britain spent as much as 45% of her GDP on military. Hardly recovered by that one big economical hole created by war, She spent another, this time 50% of her entire GDP, chunk on battling out during the second world war.

This severe drain of resources allowed the USA, fresh with surpluses off all the manufacturing and entrepreneurial innovation stirred by Franklin D Roosevelt's (the then American President) economic policies (The New Deal), to take over the baton as the World's leading superpower. 

The rest has been history. We know the might of the USA up until today. Dreams envisioned by American people have changed the way the world works...... up until today.

(Here comes a deja vu moment)

Today, the United States of America is in the same position as was the United Kingdom during the Great wars of 1914 and World War 2. The difference is that the US is plagued not only by wars in the Middle East against terrorists who seem to enjoy volunteering to die, but also by deficit-laden governmental spending that doesn't seem to be tamable - despite all the political will mustered.

Meanwhile China has all the economic surpluses in its kitty, courtesy its seemingly infinite capability to manufacture for the entire world. Also, her army, air force, naval and nuclear capabilities are well-feared world over. Whats best is, She has a billion hard-working, smart folks - which also makes them desirably cheap. Something like how the US felt before, during and after World War 2. 

Deja vu? 

.......Somehow, it is indeed difficult counting the US out to China already. The USA still has the largest purchasing power in the world, largest GDP, and most private wealth - numbers dwarfing those of China. It still attracts people from all the world to come and live the American dream. 

However, for assumptions' sake, assume that America loses its power on the World in the next decade - to China. Can China really take over the mantle? With all thats going behind Her, She possibly can. But the chances are bleak. Hypothetically, even if China does become the sole superpower, She won't be able to hold on to it for more than a decade. Here's why;

The Americans had a lot of things going for them when they took power over from the British. The most important was the language - English. The British, through all their global adventures in the past centuries, have made English The World's language. A South Korean randomly bumping into a Swede will try to converse with him/her in English, more than in Russian, French or even Arabic. All international business is done in English. Which didn't make it hard for the Americans to lead the world head on, as most of it understood their language - English.

Consider Cantonese and Mandarin, the two Chinese languages. Both have ancient histories, and an entirely alien script - as opposed to the Latin script followed by most languages including Spanish, English and a list of others. The grammar is absurd to an outsider. I find it hard for a Dutchman in Amsterdam, or an Argentine in Buenos Aires, to understand that the word, 'ma', in Mandarin can alone be pronounced in five different ways to mean five different things. 
Alas, the Chinese culture is very deep and complex as opposed to the western, easy-going, likable, American way of life. 

What makes things worse for China is her following communist principles. The Chinese government (run by the Communist Party of China) actively participates in human rights violations and a high degree of censorship. It is a well known warning, when in Beijing (or any other part of China) do not utter a word about the government in public. You'll most likely land in prison. Would such blind worship of the government be appreciated in mostly democratic nations around the globe? Uh uh, unsustainable form of world leadership.

Consider also the entrepreneurial nature of the two. However smart the Chinese folks are, they aren't natural entrepreneurs. It takes entrepreneurs, who build corporations, create jobs, innovate and build societies, to build a world-leader out of a nation. You would rarely find a Chinese businessman flashing a two-feet wide comforting smile as opposed to his American counterpart. At the end of the day, these seemingly small differences make all the big difference.

Coming back to Barack Obama's State of the Union speech. He also warned that America must compete against India. Indians who are smart and hard-working. Who are doing a better job for corporations (mainly American) around the world at an average of 1/8th the cost of American labor. 

But I find it hard for India to be a global leader. Credits to us for coming up so quick and rich. However, our politics is rotten and the civil situation gets worse at home by the day; for example in Kashmir, for example about Telangana, for example through the Maharashtra Navnirman Sena, for example by the Gorkhas in the North East. Meanwhile our smart and efficient middle-class prefers staying out of politics, content with well-paying jobs and a great sense of (mostly Western) lifestyle. All this presents a sadly grim story that our politicians are decently incompetent to lead the world... at least for another two decades.

That being said, if there is a fall in the world power wielded by Washington D.C., it is assured that it won't go solely to one place - Beijing, Brasília or even New Delhi. The polarity of world power, most probably, will be evened out between the developed and the currently developing.

Saturday, January 8, 2011

A two billion dollar stor(e)y

Antilla, a $2 billion home in downtown Mumbai. The richest residence in the world.

Its immodest stats have been flaunted all over the press; 600 working staff for maintenance, 6-floor parking for a capacity of 168 cars, three helipads, a movie theater, personal health-centers for each of the five family members, lush sprawling gardens on every level, over-stretched 27 floors (that in standard measurements would have resulted in 60 floors), and all the jazz one could ask only Alladin's genie for.

Obviously, this has led to heated debates. Some view Bill Gates' - and other Western billionaires' - philanthropic lifestyle as the modest comparison that should be adopted by India's rich. Others suggest the evident contrast between rich and poor in India is woeful: a $20 home next to a $2billion one. Having walked on Mumbai's Altamount road just a few months back, home of the Antilla, I can vouch for the bitter display of inequality.

Even India's Prime Minister has had something to say. He, politely, asked India's rich to "show moderation and to lead by example." Hmmmmmmmmm.....

. . . . .  This case holds an interesting argument. On one hand, there are social and environmental ethics involved, while on the other, its his money afterall. Frankly, who the hell are we to be potential financial advisers telling him how to spend his billions?

Lets give Mukesh Ambani a break. He hasn't done something unheard of. Historically, showing off money and power has been a hobby of the rich - Ancient Egyptians, Mughals, modern day Westerners, and Arab Sheikhs. Everyone has participated...everyone is guilty.

Shah Jahan, the great Mughal emperor, built the Taj Mahal as a tomb for his wife. The Taj Mahal was constructed using materials from all over India and Asia - at a time when the only form of inter regional transport was that of the foot. Over 22,000 laborers and 1,000 elephants were employed during the entire 22-year construction period. What made it worse was that all the 22,000 workers had their hands mutilated (so that building a replica of the Taj would be impossible.) The same can be said for Egyptian pyramids. The amount of money and resources spent on such structures, if calculated in today's denomination, has been an incredulously brutal waste.

Our response to the Taj Mahals and the Pyramids of Giza? The United Nations (UNESCO) names them World Heritage sites. 

Back to modern India. 2 billion dollar homes are not built everyday. Antilla must be given its due rather than be the topic of bitching at dinner tables, "Oh, Ambani is a crazy man." 

The prime concerns of lavish living, are these:  social inequality and environmental inefficiency.

Social Inequality: Had Mukesh Ambani had not spent his money the way he has, would India's social inequality woes have ceased to exist? Or, realistically, diminished even marginally? Social Inequality exists as it has since the times of ancient India thousands of years ago. It may not have been as stark as it is now, with Antilla in the frame. But the cover-page doesn't change the contents of the book.
On the contrary, Antilla is a brand ambassador of the new power rising in India. Else, all Mumbai had to offer was British era built infrastructure, overcrowded trains, and slums (as shown to the world in Slumdog Millionaire.)

To those suggesting Ambani should have given away $2 billion to poor instead,  I would like to ask: how much do you, Sir/Ma'am, give to the poor or social initiatives as percentage of your total wealth?

Meanwhile, $2 billion have trickled down the Indian economy. Laborers, manufacturers, engineers, consultants, drivers - there have been jobs created, and families have been given whole new livelihoods. I'm glad he spent his money this way; there are people who have been rewarded for their hard-work, tangibly.

The real downside of the whole episode is this: If one rich man has done it, it paves way for other rich men to do the same. People are inspired to lead such inefficient lifestyles, leading to inefficient consumption of society's limited resources. The environmental consequences can be troubling. Honestly, I can't defend this aspect of the argument with a fitting argument. But here's what we're doing, like we do all the time: on 9/11 2752 people were victimized. Over time, America has waged wars on the Middle East and plunked hundreds of billions of dollars; and the general American population is still haunted by that memory. But today itself, as you read this post, close to 30000 people have died all around the world from under nutrition related issues. Which one is more pressing in terms of lives lost? Where have we focused our energies instead?

Give Ambani his due, he's created a marvel.