Last week I started a discussion (see here) on how the human race might already be in the process of obliterating the memories of the devastating wars fought during the first half of the twentieth century. These wars not only changed the global political map but also deeply impacted international relations, human psychology, demography, technology, and global economics.
Since the early twentieth century, many experiments have been done in the areas of political, geopolitical, financial, economic, demographic, and science & technology. Some of these experiments failed, many succeeded and had a tremendous impact on human life, and some ended after serving their useful purpose. Some of these experiments could be listed as follows:
· Nazism, Marxism, Zionism & Radical Islam;
· USSR; NATO; Warsaw Pact; European Union; Viena Convention and VISA system; Germany bifurcation;
· Decline of Japan as a military power after Hiroshima & Nagasaki, and rise of Japan as a technology leader and economic power;
· Keynesian economics; Central Banking; Bretton Wood agreement; supremacy of USD as global reserve currency;
· UN, World Bank; end of imperial colonialism; Non-Align Movement; WTO (and GATT);
· China’s cultural revolution (including the one-child policy);
· Internet; birth control pills; microelectronics; communication;
· Dematerialization of commodities, securities & currencies;
· Petrodollar; the rise of neo-colonialism (financialized western world exploiting resource-rich developing and underdeveloped economies); export-based economic growth model of Asian tigers; and
“Artificial intelligence” (AI) is a new equivalent of the 1940s atom bomb in the present context. The technological advancements in generative AI seek to supplement the declining demographics and present huge productivity enhancement potential. However, the rise of authoritarian regimes and hyper nationalistic tendencies creates the potential for misuse; raising the specter of a repeat of the Hiroshima-Nagasaki type disaster.
On its part, India has also experimented with many things and is still trying to find its place in the global order. We have tried central planning (Nehruvian Socialism); Equality and preference for the poorest amongst poor (Gandhian Socialism); centralization (nationalization of banks, insurance, mobility, energy) to decentralization (privatization of banks, insurance, pension, roads, aviation, ports, energy, defense manufacturing, etc.); imbalanced growth (resource-rich states feeding the industrialized states in replication of colonial model) to balanced growth (industry moving to resource producers); non-aligned; strategic alliances; localization (SAARC) to globalization (BRICS+); multilateralism (GATT & WTO) bilateralism (FTAs); Peaceful coexistence (Panchsheel) to surgical strikes; Secularism to Hindu Nationalism; etc.
We have completed a remarkable journey from a totally devastated nation in 1947 to becoming the fifth-largest economy in the world. The indications are that this journey may continue at an accelerated pace over the next couple of decades. However, at a micro level, we are far from becoming a middle-income country as over 50% of our population fails to meet the basic living standards.
Recent events in Ukraine and Palestine indicate that our influence over international matters may be even lower than it was in the 1950s and 1960s.
Our eagerness to grab the so-called ‘China+1’ opportunity indicates that we do not mind becoming a factory for the developed country, doing low-margin manufacturing; even if it involves significant incremental climate damage to our already “severe” category conditions. Our leadership has made it clear at the recent climate meeting in Dubai that our commitment to emission targets cannot be at the expense of economic growth (see here); even if it is unsustainable.
The recent incident in Uttarakhand where we needed to import a drilling machine from the US and a mining expert from Australia to rescue 41 workers trapped in a tunnel shows how inadequate we may be in skill and technology. It is common to see product promotion for basic commodities like cement & adhesives, manufactured with foreign technology. We have no leadership in the development of generative AI; 6G and 8G telecommunication infrastructure (still struggling to roll out 5G networks).
Obviously, the effort to assume strategic and technology leadership are seriously lacking in our growth endeavor.
India (small elite urban population) vs Bharat (majority poor, largely rural population) debate has been raging ever since independence. The disparity between these two sections has continued to widen with acceleration in the growth.
Nonetheless, for a small section of the Indian population engaged in manufacturing, construction, mining, financial services, technology services, and premium & luxury consumption, this is perhaps the best time in two centuries. By implication, this is also the best time for the financial investors, who have invested in the equity of these businesses. On a relative basis, Indian businesses may not be doing as well as their American or Chinese counterparts, but in absolute terms, they are doing great, especially from a historical context.
Small investors like me therefore may have a good opportunity to create wealth. More on this in the coming days.
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