Thursday, November 29, 2012
The 'Inside Economy': Recovering From Rhetoric
Joshua Cooper Ramo somewhat spills the beans in his latest article in Fortune (read here) and says a thing that everyone knew but was afraid of saying: That, to quote Ramo, "globalisation has a reverse gear". Citing arguments that would be familiar to those who followed Pankaj Ghemawat's work (see his TED presentation here), Ramo makes the case for the "inside economy", one made of local consumers and producers, that is fast filling the gap left by the receding global trade.
The point is - we know this already. India, as I have argued before, rode through the tides of global recession looking inward: While its outwardly-orientated industries, IT and Aviation for example, took a beating, the ones serving domestic demand, manufacturing, retail and financial services delivered steady growth and jobs. China turned its economy slowly from an export-driven one to one aligned to local consumption - the slowing of Chinese growth, in my view, is an indicator of this change, rather than its fallibility - and, as Ramo argues, America is doing the same.
However, while the facts are quite clear, the interpretation of it begs a debate. In Ramo's view, this somewhat means we have overdone globalisation, moved too far too fast. However, in reality, we actually never got started. Indeed, the rhetoric - of 'flat world' - and its messiahs, such as Tom Friedman, overtook the reality; this, coupled with neo-liberal conquest of the world, made us, at least those of us who read English language news, believe that globalisation is complete, irreversible and a natural next step in history. This is 'globalony', as Pankaj Ghemawat calls it, a sensationalism that may sell books but eventually leads to reactions such as Ramo's, which denounces the effects of something that never happened. This is where the 'inside economy' argument starts getting problematic.
The 'inside economy' isn't a new reality, but one that was always there: Just that it was unexciting and didn't get the share of the rhetoric. Let's consider India: The middle class boy who huddled through a newly formed Engineering College and suddenly is sent abroad, may be making it his first Aeroplane trip, made a much better story than those village boys who goes to the city and sets up a small shop, but the latter is both more numerous and had more impact, in relative terms, among people around them. The Chinese trinkets, flooding its own market and Asia, were not hailed as the coming of the great power, but the produces of its slave labour, our shiny new iPads, certainly were. And, the worst kept secret of American business was its 'inside economy' - only 1% of any American company had any operation abroad - and the reason American businesses do well is because they could tap into a ready market of consumers who were willing to take risks.
So, in the end, Mr Ramo's presentation isn't in line with Mr Ghemawat's, but its opposite. Mr Ramo seemed to have bought into the flat world exuberance, only to suffer disillusionment as he discovered the twists and turns. His conclusions, in retrospective, are dangerous: We did not do Globalisation too fast, we never did it. We mixed up globalisation with the movements of global capital, which surely moved faster than ever, but that makes no difference to people and lives and even real businesses. And, besides, if we have to get out of this recession, what we need is more globalisation, not less.
A friend has recently forwarded me a quote from Lord Macaulay's speech in the British Parliament on 2nd February 1835. I reproduce the...
Introduction : The Business of Gift Giving Business gift giving has always been common and contentious at the same time. Business gifts are ...
'Post-Truth' was the international word for the year 2016 for the OED. And, 2017 is firmly entrenching the idea, with 'alterna...
(Image Courtsey: The Economist) As we wait for the Trump Presidency, the transformation of the American Corporatist State into a Co...
Should we compare Trump to Hitler? Hitler is a real historical figure, but he is also a symbol, something we invoke perhaps a bit too ...
EdTech was one of the fancy terms that took hold in the last decade. It succeeded 'e-Learning', which started the journey around t...
There are people who would proclaim 'End of Capitalism' as each new crisis breaks, only to be proved wrong. Just as Marx did in hi...
There are other ways of describing them. An inexact 'millennial', approximating the year they were born in; a condescending 'y...
The conversation in India today is centred on exporting workers. The Indian government is funding Skills Development centres across the co...
The title of this post is in quotes because someone told me this. This was some days ago, over lunch in London, something that I stayed wi...
How To Live
"Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the grey twilight that knows neither victory nor defeat."
- Theodore Roosevelt
- Theodore Roosevelt
We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.
- T S Eliot
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.