Wise words from Obama at last!

July 8, 2009

Thankfully, and before too late, President Barack Obama has changed track. Addressing a bunch of students this Tuesday at the New Economic School in Moscow, he said: “Think of what’s possible today that was unthinkable two decades ago. A young woman with an Internet connection in Bangalore, India, can compete with anybody anywhere in the world. An entrepreneur with a startup company in Beijing can take his business global. An NES professor in Moscow can collaborate with colleagues at Harvard or Stanford. That’s good for all of us, because when prosperity is created in India, that’s a new market for our goods; when new ideas take hold in China, that pushes our businesses to innovate; when new connections are forged among people, all of us are enriched.”

Tsch, tsch. Wise words indeed and at last from someone who, not too long ago, had managed to stir a hornet’s nest with his strong jingoistic opposition to the outsourcing trend.

Political pragmatism? Misplaced jingoism? Desperate despotism? Or simply, that truth is finally dawning on the tough-talking President, who, whatever be his public posturing, knows in his heart that he past cannot be undone. He’d be smart enough to recognize that at the core of this outsourcing trend, lies an irreversible phenomenon called globalization.

For instance, at another point during his speech, he concedes, “In America, we’re now taking unprecedented steps to jump-start our economy and reform our system of regulation. But just as no nation can wall itself off from the consequences of a global crisis, no one can serve as the sole engine of global growth. You see, during your lives, something fundamental has changed. And while this crisis has shown us the risks that come with change, that risk is overwhelmed by opportunity.”

Its time America realizes that isolationism is the strategy of the arrogant and the foolish. In today’s world, no one can stay an island and hope to prosper. The global recession and its far-reaching consequences on every nook and corner of the world, even on somewhat protected economies like India, testify to this mutuality. Fact is that if the First World wants the second and the third World to open its markets to their finished goods; they would in turn have to face the demand to open their labor markets to the surplus human resources from these countries. And, this kind of a trade-off has begun to take place even between the so dubbed Second World countries — China is dumping cheap toys in India that has almost destroyed the local toy manufacturers.

Recall that when the British started flooding the Indian textile market with their “cheap” factory made garments, during their rule in India, it nearly demolished the local industry, until Gandhi revived it again with his foresightfull khadi (a coarse, hand-woven cotton fabric woven on simple looms at home) campaign, that too this day, survives as an emblem of sovereignty for Independent India.

However could that, completely stem or reverse the flow of textile imports into India?

It could not and we now import all sorts of fabrics, finished and semi-finished, ready-made branded garments from all over the world (most notably from the US). Despite the prevailing quota regime, that got abolished a couple of years ago, the Indian market has sustained this “onslaught” well and matured, while the domestic players have benefited from the intensified global competition.

What does all this indicate? That change is never easy. Nor is it reversible; but the outcome is not necessarily always bad.

Have you seen how when a little seed falls on the ground, some of the caked earth cracks. A child might say, “Look! It’s a sign of destruction.” But an adult knows better. To him, it’s a sign of creation. Or as Obama rightly said, a sign that risk can be overwhelmed by opportunity.


3 Responses to “Wise words from Obama at last!”

  1. Yogi on July 13th, 2009 12:18 pm

    So, What does this mean? there won’t be any change in US tax laws that affects offshore outsourcing?

  2. Radhika on July 13th, 2009 11:25 pm

    Those tax policies are already in place and will remain so, at least till the US is out of the deep crisis, but what President Obama’s latest statements imply is that, deep down, he too conceeds that the clock hands cannot be turned back; that outsourcing and globalization are here to stay.

  3. Bandra on July 14th, 2009 9:06 am

    Nice blog, I hope US doesn’t change their policies for short-term benefits without thinking about the future. I think Obama has to satisfy his portion of his party base and for that purpose he sounds like he is against globalization but in his mind he knows that he can’t change and it is not a long-term solution

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