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Controlled globalization...



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Dear Vamsi, 

It is a very pertinent subject -- and here are some of my views on this
"controlled globalization." 


<<
Power must be diluted if we are going to see any improvement in standard of
living, human rights, purchasing power, etc.  While I agree that local
interest
outweigh any global interests, it is for this very reason that I support
liberalization before globalization (while the differences between the two
become very unclear as time progresses).
>> 

In the first world which went through a phase of liberalization, it was the
case that liberalization "spilled over" into globalization. A liberalized free
market automatically grows beyond its boundaries (with the appropriate
technologies, of course). 

However, in India liberalization and globalization are sought to be brought
about simultaneously. This results in a situation that the liberalized free
market will be a skewed one that is not demand driven. 

It seems easy to suggest that India close its borders again and implement
liberalization first and then globalize. This, IMO would be another grave
mistake. 

So what *is* the solution? Controlled globalization seems to be one more
evident alternative. But even this has a short coming that either the
controllers lose the big picture of what they are controlling and why; or the
neo-globalists lose patience and hit hard on the control structures to bring
down the whole structure. This is especially pertinent to a diverse country
like India. Some tech savvy CM might get intoxicated by his small taste of
success and and seek to override the larger issue of national interest. There
are also neo-globalists who like to wield the argument that the nation exists
for the individual and not the other way round. So if the individuals want to
go against national interests then national interests should be changed. But
what is missed in this argument is that the people who are the most vociferous
are those who already are rich enough to express their demands. A large number
of people might still be aligned with the national interests, but because
their demands are never registered, they are not considered to exist at all. 

Since dilution of power (decentralization) is more a more robust structure for
diverse economies, I think it is pertinent to ask, whether there can be some
decentralized mechanism that can implement globalization in such a way that
the resulting configuration is demand driven (equal-opportunity free market
system). 

I believe, the answer might lie in what are called local economies... but more
on that in some other mail. 

<<
It is exactly for this reason that I stated previously that a competent
Indian
Legislature is a prerequisite for globalization.  Much as liberalization
would
empower local citizens, globalization can shift power to India if we had some
reasonable people in the Parliament.  The examples below where some countries
have actually suffered due to globalization are self-evident that their
Government was indeed incompetent.
>> 

Government structures are simply systems whose performance are likely effects
and not causes. Government inefficiency or government efficiency is not a
solely concious decision. It is a result of the system structure. A competent
legislature can result when the system is liberalized; however, a system
cannot be just locally liberalized when there are stronger markets outside
(someone somewhere in the liberalized system would want to do freer trade with
the stronger systems), and a globalization of a weak liberalized market
creates economic skews which would actually bring down government efficiency.
(I probably can sketch this better using influence diagrams). Complex systems
are characterized by vicious circles, and this is a real vicious circle! 

<<
Surely, we are not to ignore states such as Singapore and Hong Kong where the
Government is moderately competent and implemented a "planned" globalization.
Global isolation is often prescribed as a remedy for legislative
incompetence by
a misinformed electorate.  This is a grim injustice to the present and future
generations!!  We have an obligation to engage the world at large and benefit
from it.
>> 

I am somewhat sceptical about comparitons to Singapore and Hong Kong simply
because of India's size and diversity. A number of issues that could be safely
neglected in small complex systems become unbearably complex when size
increases. There is no example of a weak free market globalizing in the face
of stronger markets. I think it would not be wrong to say India's case is
uncharted territory. 

<<
Globalization can and must be used as a vehicle to shift more economic
power/prosperity to India.  The overwhelming question is whether we have
such a
vision or do we whimper at every challenging obstacle?
>> 

My question would rather be -- do we have the plan? My belief is that it is
not that easy! Passions and impatience may have real huge implications. 

Best Regards 
Srinath 


 

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