[Fully protected by state?]
Globalization has changed us into a company that searches the world, not just to sell or to source, but to find intellectual capital - the world's best talents and greatest ideas - Jack Welch.
- Indian experiment with Protectionism:
There was a time in India when Swadeshi (Using the Indian
made products) movement was on its height – at that time it to protect the
local economy from the injustice of administration; a fight against the mighty
British Empire and its notorious taxation laws.
Even after independence government vigorously promoted
country made things. Travelling in State owned Air India, Indian Railways and
various State Transport Corporations - which rarely produces any profit; banking
in state owned banks like SBI etc.; Oil Exploration business through state
owned entities like ONGC; Coal exploration through Coal Indian which doesn’t face
any completion from Indian market; Using
the electricity produced by various state owned corporations – where production
rarely met the demand; calling friends and family using the telephony services
provided by Government - there was a
decade long waiting list to get a new connection at that time; notoriously
corrupt Public Distribution System(PDS); severe restriction in holding foreign
currency; commonly known as the era of the infamous License Raj.
During the British Raj country slipped from the top positions
in trade - looks like the ghost of the past glory. Even after independence
Indians was unable to regain the pre-colonial dominance (controlled close to
23% of world trade) in the world trade and economy. Things changed in the early
1990s, after the then government of India forced to do critical surgeries in
economy to save it from the total collapse. Still opening up insurance,
banking, defence sector faces severe opposition from the left and trade Unions.
It may take several more years for India to completely eliminate the protectionist
policies.
The result of License Raj was disastrous. The so called
‘Asians Tigers’ – Singapore, Taiwan, Hong Kong and Korea marched in front of
us. Japanese economy starts flying like a Phoenix, Chinese opened up their economy,
and Pakistan attained more growth rate than India. Oil boom in Middle East
changed that sector from a mere desert to that of a golden oasis – but still
India didn’t have proper exploration policies. When we finally discovered huge
oil deposits in KG (Krishna- Godavari) basin there was long legal battle
between Government and Private Companies. What more; despite having thousands
of kilometers of costal area, we are depending on Singapore, Salala and Colombo
ports for transshipment.
Because of our ‘uncontrollable appetite’ for the products
from state owned companies which doesn’t face any competition from market – a
characteristic of socialist countries, we are still depending on the technology
transfer agreements and so called foreign collaboration, no matter weather it
is for the development of a new Boiler for power plants or fighter plane. Still
we are not producing a civilian aircraft on the lines of Boeing, Airbus or
Embraer. The list will be too long if we are going to describe all the things.
These are the things happened in Indian and may other
countries that got freedom after Second World War and vigorously promoted state
owned companies. If US wants to going back to that era where state decides
everything, from how much a person can eat to how much he can earn, it will not
take much time for them to experience the above mentioned things.
- Effect of Protectionist policies in Education:
It’s good that new US government encourage education, they
should do. Because the only way a country can remain in the top echelons of
trade and prosperity is through innovation. But innovation will not come from
the protected test tubes. It required some air. Countries are prospering when
there is an exchange of ideas between the nations, interaction between the
people. There is no need for reinventing
Newton’s or Keller’s laws when it is already proven and available.
If US don’t allow companies to hire best brains in science
and technology sector – which can also be come from abroad – their efficiency
will be eroded over time. In this era of knowledge explosion you should always
have the best resources. It is also to be noted that the scientific progress in
the US after World War II have heavy contributions from European scientists who
migrated to US.
- Effect of Protectionist policies in Agriculture:
The protectionism in agricultural sector may provide
temporary advantage to the farmers but it will raise the expenditure for food
among common people, every one can’t be a farmer and those who are not farmers
have to buy food grains. In the absence of competition, improvement in
production and quality will take the back seat.
- Effect of Protectionist policies in technology and Service sector:
What If US government restricts/ban the services of foreign
companies in IT and other technology sectors? If the US House of
representatives can pass two different bills that mandate the congress and
Department of Homeland Security to purchase only US made goods, the other
legislative assemblies around the world also can do the same. For example,
India can decide to cancel the entire orders for the aircrafts from Boeing,
Lockheed Martin etc. and redirect it to Airbus, Eurocoptor or Embraer etc.
There is no need for giving orders for the construction of new nuclear power
plants in India to GE or any other US company for that matter - Avera and many Russian
companies will very happy to grab the orders.
What about Microsoft, Google,
Cisco, Apple, Xerox etc? Can’t we use 100% non American products? US have to
realize the outcome of their old philosophy of Globalization and
Liberalization. The world is more interdependent than ever before, and it is
for the mutual good. So instead of forcing Indian IT professionals to fund for
the construction of walls in Mexican border, they can use them to improve the competitive
levels of US technology, educational sector etc.
[Shanghai deep water port - benefits of globalization]
[Shanghai deep water port - benefits of globalization]
- Effect of Protectionist policies in oil:
What about Oil, like the Berry amendment originally enacted
in 1941, requires the department of Defence to procure a range of domestically
produced or grown items with 100% US content, why not US use 100 % oil from US
soil instead of importing it from Central Asia, Africa, Middle East etc.?
- US ready to lose the leadership?
US have to realize the hard facts, if they are not ready to
face the global order and ground realities their position as a leading country
in the world will soon become history. A lot of countries in this world are
more than willing to assume that position.
Former UN General Secretary Kofi Annan once said - “It has been said that arguing against globalization is like arguing against the laws of gravity.”
Sajeev.
[Both pictures are from Wikipedia]
[Both pictures are from Wikipedia]
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