2ndlook

1945 Britain – Imperial ambitions of a starving nation

Posted in British Raj, European History, History, India, politics by Anuraag Sanghi on December 30, 2009

After WWII, failure at something as basic as agriculture did not stop a Britain from nursing imperial ambitions.

"Food shortages in Britain" - Vicky (Victor Weisz) cartoon First published by Daily Mirror on 11 February 1955

“Food shortages in Britain” – Vicky (Victor Weisz) cartoon, first published by Daily Mirror on 11 February 1955

Britain, after WWII, seeing its colonies slip away one by one, was an anxious nation. Facing food shortages, the mood soon lapsed from anxiety to near-paranoia.

A symptom of that paranoia were villains that Ian Fleming created. Bullion-smuggling Auric Goldfinger or bio-warfare master Ernst Stavro Blofeld. Blofeld, in Fleming’s On Her Majesty’s Secret Service (1963) is caught planning a germ-war against British agriculture.

Factually, British agriculture did not need a Blofeld to trigger a crisis. In doldrums for the previous hundred years, food-shortages till WWI were averted by massive imports – mainly from Russia. After WWII, it was US and Argentina that filled the gaps in food shortages.

But failure in something as basic as food shortages did not stop a Britain from nursing imperial ambitions.

Of Britain itself

It is a notorious weakness of Indian historians that they assume the British were far more clever and subtle than in fact they were. (from a book review Philip Ziegler, Not so duplicitous as painted, Thursday, 21st September 2006, from The Spectator).

Dependent on US food and economic aid, Europe rebuilt its economy with industrial exports based on a favorable exchange rate – much like Japan, Asian Tigers and China did later. His hand forced, Churchill had to call for elections, soon after WWII.

A starving, indebted Britain, took cold comfort in welfare state promises made by the Labour Party – and Clement Attlee (a sheep in sheep’s clothing as described by Churchill) became the Prime Minister of Britain.

Without assured raw-materials sources and protected markets, (especially India), British exports nosedived. The British economy collapsed in the next few decades. British Coal, Railways, Steel, automobile industry, ship-building went into a terminal decline – never to recover.

Memory lapses

Sixty years after decolonization of India, with memories dimmed, Western writers and academics credit British for decolonization and lay the burden of the Partition-related communal violence at Indian doorsteps.

“British government conceded Indian self-rule, they thought this the right thing to do. What would have happened to the Koreans or the Vietnamese if a local Gandhi had tried such tactics against the brutal Japanese kempetai or the French with their mercenaries from Morocco and Senegal? It was not that Gandhi was successful but that the British were forbearing … Gandhi’s tactics only work if the other side lets it …”(from Christie Davies’ Blog The Social Affairs Unit).

"The idea is to spray a little around the kitchen the smell of frying bacon permeates through the house whets the appetite"

“The idea is to spray a little around the kitchen the smell of frying bacon permeates through the house whets the appetite” says cartoonist NEB (Ronald Niebour) First published by The Daily Mail on 20 December 1951

Abdication! … retreat? … fait accompli.

This is an argument worth looking at.

Was Britain, after WWII, in any shape to impose, concede, accede or reject any position by the Indian leadership or the population.

But before that, an interesting extract about the handover of power to India.

But even as it bade farewell, Britain was to visit two disasters on the subcontinent. One was Attlee’s appointment of Lord Mountbatten as the last Viceroy. Conceited, impatient, and breathtakingly arrogant, he took to the grandeur and the raw power of the job with unholy relish.

Mountbatten decided that independence would come on August 1947, on the second anniversary of the day he had accepted the surrender of the Japanese in south-east Asia. Nothing was to stand in the way of this vainglory – not even the unresolved issue of Muslim demands for a separate state, and the gathering storm clouds of communal violence.

In a few summer weeks, colonial servants scribbled lines across the map of the mighty subcontinent, carving East and West Pakistan out of Mother India, and sparking a bloodbath so frightful that no one to this day knows exactly how many millions died. (via 1945-51: Labour and the creation of the welfare state | Politics | guardian.co.uk).

Like this article in The Guardian points out, Mountbatten’s August date for Indian independence was based more on his need to ‘celebrate’ his ‘personal’ milestones than ground realities in India.

"Now when daddy's broken it, we'll proceed anti-clockwise, to take a spoonful each." Cartoon by NEB (Ronald Niebour)First published by The Daily Mail on 24 March 1951

“Now when daddy’s broken it, we’ll proceed anti-clockwise, to take a spoonful each.” Cartoon by NEB (Ronald Niebour) First published by The Daily Mail on 24 March 1951

End of rationing

Potatoes, eggs, milk, cheese, petrol. clothes, meat and bacon (fish excluded) were all rationed – which finally ended in 1954. A huge bureaucracy and rules created an elaborate rationing system which finally ended 9 years after the end of the WWII – in 1954.

Reduction in Russian agricultural exports after Stalinist collectivization of farms, deprived war-ravaged Europe of a nearby source of agricultural commodities. In the Russia of  1953, one year before rationing ended in Britain, the year of Stalin’s death, grain production was below the level reached in 1913.

Instead, high cost food imports from Argentina were needed. This caused much angst and hand-wringing in the British Parliament. One British MP, Sir Waldron Smithers (Orpington), to revealingly, complain about how it “looks as if the Argentine Government took a nice commission of £49 million at the expense of the British taxpayer”. The same MP, Sir Waldron Smithers(Orpington), further referred to “an article which appeared in “Wall Street Journal, New York,” published in the “Evening Standard” on 13th March, with the title, “How to make 200 per cent. profit on wheat … The procedure is simple. Buy wheat from the farmers for £11 to £13 a ton—sell it to the bread-hungry British for £34 a ton.” This, according to the MP, was a price that, “tops the peaks of world war I and the Napoleonic wars … They know that Britain is short of food, and they are getting the highest prices they can.

"He must be very short this week - I've never seen him use a watch-repairers glass before." cartoon by NEB (Ronald Niebour) First published by The Daily Mail on 31 March 1951

“He must be very short this week – I’ve never seen him use a watch-repairers glass before.” cartoon by NEB (Ronald Niebour) First published by The Daily Mail on 31 March 1951

The break …

British and European farmers increased production as massive subsidies were lined up. A Europe-wide agricultural subsidy scheme named Common Agricultural Programme – (CAP) was put in place.

The CAP was instigated against the backdrop of food shortages and rationing after World War II, to stabilise European food markets while giving farmers a steady income and consumers low prices. (from Q&A: Farm funding row).

The CAP scheme was never withdrawn – and what was an emergency scheme, is now a US$70 billion behemoth.

The Gambia Egg Scheme

A desperate UK came out with schemes – non-union, low-cost, African ‘employees’ would produce poultry and eggs, and groundnuts (scheme in Tanganyika), rice-and-fish in Nyasaland – ‘to assist in the rehabilitation of the motherland’, i.e. Britain.

The Colonial Development Corporation was set up to invest in the ‘development’ of the colonies. Schemes for ‘encouraging’ and ‘developing’ agriculture in the colonies were proposed and promoted. Each one a greater disaster than the other. Tired of food shortages, rationing, a desperate Britain announced

ill fated grandiose scheme that were heralded, with many a flourish of political trumpets, before grinding to an ignominious halt under the sheer weight of bureaucratic inertia and slipshod planning. The very names of these schemes – groundnuts from Tanganyika, eggs in Gambia, rice in Nyasaland – will evoke wry smiles among those whose memories can stretch back to the immediate postwar years, when “big is beautiful” caught the imagination of planners and politicans alike.

A groundnut scheme and eggs and poultry scheme became objects of much merriment, mirth, concern, and favorite objects of cartoonists – African groundnuts to Gambia egg ranches, ‘cost the Government a tremendous amount of public support‘. Post-War Britain, short of cooking fats, looked at Africa.

"Profiteer" and "Black Marketeer" saying "now we can skin him tax free", rabbit trapped in a hutch marked "British Public". Cartoonist Illingworth cartoon, June 27, 1946.

“Profiteer” and “Black Marketeer” saying “now we can skin him tax free”, rabbit trapped in a hutch marked “British Public”. Cartoonist Illingworth cartoon, June 27, 1946.

Frank Samuel, (managing director of the United Africa Company, a subsidiary of the large British corporation Unilever) suggested groundnuts cultivation in Tanganiyika. Tractors and equipment were airlifted from Canada and Philippines to the nearest airfield, and thence by sea to Dar-es-salaam. After landing at the Dar-es-salaam port, to be transported into the interior, rail tracks from Dar-es-salaam were washed away. Soil and rainfall were unsuitable – and the British taxpayer paid the price for these grand projects.

In 1949 the government had promised: “Within two years, British housewives will be getting 20 million eggs and 1,000,000 pounds of dressed poultry yearly from Gambia.”… The British government put $2,000,000 into a model poultry farm outside Bathurst, but disease and bad feed killed off the chick ens, and after production of 40,000 eggs—at $50 an egg—the farm was transformed into a teacher’s college … While waiting for the local feed supply to be produced, (to feed the chicks), the government authorized spending of more scarce dollars for American grain … Last week Colonial Secretary James Griffiths told the House of Commons that the plan had failed and would be abandoned. Reason: the government planners had regrettably failed to find out whether Gambian land would grow chicken feed. The fact: it would not.

The House of Commons, ever alert to possible cruelty toward dumb animals, had some questions. Richard Hurd, Tory member for the Newbury division of Berkshire, asked Griffiths: “Can the Minister tell us how the birds that will survive are to be fed for the next few months?”

End of WW2 did not end British problems. Illingworth's cartoon published on August 5, 1941. Churchill collecting rubbish into a sack, called "Britain's war problems" like "Dislocation of rail traffic" "Waste of coal" and "Local food shortage"

End of WWII did not end British problems. Illingworth’s cartoon published on August 5, 1941. Churchill collecting rubbish into a sack, called “Britain’s war problems” like “Dislocation of rail traffic” “Waste of coal” and “Local food shortage”

Tory members roared an answer: “On promises and groundnuts.” (This was a cruel reference to the government’s £36 million scheme for growing peanuts in Africa; failure of the groundnut scheme was announced Feb. 20.)

Edward Keeling, Tory member for Twickenham, asked Griffiths: “Can the Minister say if it is true, as was reported in the Daily Telegraph, that the new director of the scheme has stated, ‘I hate chickens’?” (From Time magazine articles; Foreign News: Scrambled Eggs, Monday, Mar. 12, 1951; and Gambia: Newest, Smallest Friday, Feb. 26, 1965).

In the dying days of the Raj

A defensive Britain, never one to lose sight of propaganda opportunity, used India’s ‘ship-to-mouth’ food shortages to diminish  the Indian economy. Even while grappling with the critical food situation at home. Or a war in Europe, British propaganda machine never stopped working.

In the middle of WWII, Britain pulled out a general from the Italian theatre of war and sent him to India – to head colonial India archaeological operations.

John Bull (Britain) pleading from Juan Peron (Argentina) for Food - Does Falklands make sense now?

John Bull (Britain) pleading from Juan Peron (Argentina) for Food – Does Falklands make sense now?

One evening in early August 1943, Brigadier General Mortimer Wheeler was resting in his tent after a long day of poring over maps, drawing up plans for invasion of Sicily. Mortimer Wheeler was invited to become the director general of archaeology by the India Office of the British government in its last years of rule in South Asia … Summoning a general from the battlefields of Europe was an extraordinary measure, an admission both of the desperate condition of Indian archaeology and an acknowledgment of its vital importance. (from The Strides of Vishnu: Hindu Culture … – Google Books).

Amazing!

Why would the glorious British Empire, on which the sun never set, struggling for its very existence, in the middle of WWII, suddenly pull a general back from the battlefield – and put him into archaeology! That too, Indian archaeology. Not Egyptian, not Greek! Especially, when it was clear, that they would be departing from India – sooner rather than later.

Considering what theories came from Mortimer Wheeler’s rather fertile ‘imagination’ and his rigourous archaeological process, in hindsight, from a Western perspective, this was sound decision. The main targets for Mortimer were Takshashila and Indus Valley ruins. His ‘explorations’ led Mortimer Wheeler to remark,

“They demonstrate with astonishing clarity the extent to which the brief transit of Alexander did in fact Hellenize almost instantly vast tracts of Asia populated previously by nomads or semi-nomads and villagers”

It is this one incident which possibly contains answers to many unanswered questions like: -

  1. The amount of energy expended by the West in defending the Aryan Invasion /Migration Theory
  2. The lack of access to Indian scholars of the archaeological sites in Pakistan
  3. The many myths in Indian history
  4. The clues to the partition of India
  5. The dating problems

et al.

Just why did the world’s foremost imperial power, struggling for its very existence, suddenly pull a general from the battle field, in the middle of WWII – and put him onto the job of digging dirt.

Would the US have funded Britain's Imperial ambitions?

Imperial ambitions! Funded by US? Cartoon by Illingworth, August 6, 1947. (Attlee, the bird feeding a large chicken “British Zone in Germany” taking up the entire nest of “British economy”. 3 malnourished chicks named “Import export gap”, “Food shortage” and “Controls”).

Underneath the Western sky

Making sense of the newly formed Indian nation was herculean task. After more than a century of propaganda, Western ‘education’, inversion of history, post-colonial Indian rulers struggled between the ‘glossy’ imported idioms and the familiar native dialogue.

Caught in this dilemma, the Indian State vacillates between a unique Indic inheritance and the detritus of dead-end colonialism.

The other aspect of the entire Independence debate was of British debt owed to India. After loading every clause and phrase in the terms of trade, in its own favour, Britain was a debtor nation to India.

Britain now owes £1,030,000,000 (about $4,500,000,000) in the form of sterling credit to India. Britain is unable to repay even a small part of the debt immediately, and does not want India to sell her sterling credit to the U.S. In time she hopes to pay her debt by sales of export goods to India. (from INDIA: The Wavell Plan, Monday, May. 21, 1945).

More interestingly, Jaswant Singh’s book brings out clearly, Jinnah’s shrill demands for 30% reservation in all of India to ’safeguard the interests’ of the erstwhile Muslim ‘ruling class’ left only the Congress, SC Bose and the Hindu Mahasabha as the spokesman for an India – and not for a narrow community, class or section.

1857 again …

What made Attlee finally see the futility of holding on to India was the Indian armed forces.

At the end of WWII, Britain was a ‘superpower’, intact with its huge colonial Empire – apart from the massive debt that it owed the US. With Germany defeated and Hitler dead, Italy in shambles and Mussolini hanged, Britain sat at the head of ‘high tables’ in the post-WWII world deciding the fate of the nations – with its partner in crime, the US of A.

The coming winter, Cartoon by Illingworth, October 1, 1945. Dark clouds over Britain. The storm clouds are 'Lend-Lease End', 'Food Shortage', 'Balkans', 'Russian Demands', 'Fuel Shortage' and U.S. Strikes'.

The coming winter, Cartoon by Illingworth, October 1, 1945. Dark clouds over Britain. The storm clouds are ‘Lend-Lease End’, ‘Food Shortage’, ‘Balkans’, ‘Russian Demands’, ‘Fuel Shortage’ and U.S. Strikes’.

February 18th, 1946. Some the 20 lakh colonial Indian armed forces, united and raised the banner of Independence. United across ranks, skin colour, language, geography, religion, caste, height, weight – with only one thing uniting them. They were all Indians.

On February 18th, the men of Indian Navy (then the Royal Indian Navy) rained on the British parade – by raising the flag of Indian Independence. Britain did not have the stomach to take on the Indian Colonial Army, battle hardened and exposed to warfare in all the global theatres of WWII. The British acquiesced and 18 months later they were out.

By the night of the 20th nearly the entire Royal Indian Navy was in open rebellion: seventy eight ships across various Indian ports — Mumbai (then Bombay), Karachi, Chennai (then Madras), Vishakapatnam (thenVizagapatanam), Kolkatta (then Calcutta) and Kochi (then Cochin), extending to the Andamans. Most of the on-shore establishments lowered the Union Jack. Some ten ships and two on-shore establishments remained loyal to the British.

Before the sun went down, 12,000 seamen of the Royal Indian Navy had seized a score of ships, 18 naval shore stations and a naval dockyard in Bombay Harbor. For two days their ships, deployed in battle line along the harbor wall, defied the British. At Castle Barracks, where besieging British troops fought barricaded Indians, the mutineers turned their artillery on the Bombay Yacht Club (the very symbol of British racial supremacy), where no Indian may enter. At Karachi, Indian naval ratings seized the sloop Hindustan, dueled with British batteries along the waterfront …

British troops, ships and planes converged on Bombay, as rioters swept through the town, setting fire to banks, government grain shops, a cotton mill, a train, British cars, British stores. Night & day they fought police and Tommies, stoned British civilians. British authorities declared a state of “absolute rebellion,” ordered loyal troops to “shoot to kill” anyone moving on the streets at night. Before the mutiny ended, casualties mounted to 240 killed, more than 1,300 injured. On the other side of India, demonstrators surged through the streets of Calcutta, and sympathy strikers tied up transportation.

St.Clement Attlee chases a rabbit, while ignoring the Dragon of Egypt, Famine and India, holds Queen Britannia captive. First published - May 21, 1946

St.Clement Attlee chases a rabbit, while ignoring the Dragon of Egypt, Famine and India, holds Queen Britannia captive. First published – May 21, 1946, (Attlee was pulling back troops from Egypt, India was gaining independence, Britain was facing food shortages, the government was nationalising railways, coal mines, steel industry and public utility companies).

India’s Britons recalled the horror stories of 1857, when Army mutineers seized seven of India’s cities, including Delhi. Would Indian Army troops revolt again? Already Indian Air Force men had staged sympathy “strikes.” Like the Navy mutineers, soldiers demand better pay, better food, faster demobilization. Indian troops, the bulk of British overseas forces, are scattered wide in the world’s trouble spots: Greece, Indonesia, Syria, Burma, Egypt, Malaya, Iraq and Hong Kong. If the mutiny should spread among them, Britain’s weakened voice in the world’s councils would scarcely be able to whisper. The Army remained quiescent, but even trusted veterans were attending secret meetings of extreme nationalist groups. The British Government would have to act fast … London announced that three Cabinet ministers—Lord Pethick-Lawrence, Secretary of State for India, A. V. Alexander, First Lord of the Admiralty, and Sir Stafford Cripps, President of the Board of Trade—would go to India … The 1946 negotiations might prove more difficult than the first Cripps mission. Moslem and Hindu had drawn much more closely together…

Nehru and his fellows no longer denounced violence as if they meant it. They sensed a new mood in India’s masses, and swung toward extreme methods lest new leaders arise more in tune with the spirit of rebellion.

In the Calcutta riots the Congress tricolor and the Moslem green flag (and sometimes the hammer & sickle) had floated side by side from windows, from taxicabs, over the heads of marching throngs. Together they had flown from the masts of the mutinous ships at Bombay. At Karachi mutineers scrawled on their ships: “Not mutiny but unity among Indian sailors.” A new slogan was heard in India: “Ek Ho!” (We Are One). (from Time magazine INDIA: Ek Ho! Monday, Mar. 04, 1946; ellipsis mine, parts excized).

On February 19th, 1946, PM Clement Attlee announced that a British Cabinet delegation of three ministers would visit India. He followed this up, on 20th February, 1946, with a statement in the British House of Commons,

His Majesty’s Government desires to hand over their responsibility to authorities established by a constitution approved by all parties in India … His Majesty’s Government wish to make it clear that it is their definite intention to take necessary steps to effect the transference of power to responsible Indian hands by a date not later than June 1948 … His Majesty’s Government will have to consider to whom the powers of the Central Government in British India should be handed over on the due date

On 15th March, 1946, Attlee announced in the British House of Commons that Britain was leaving India. 23rd March, 1946, Lord Pethick-Lawrence, Secretary of State for India, A. V. Alexander, First Lord of the Admiralty, and Sir Stafford Cripps, President of the Board of Trade came to India for consultations on modalities for power transfer.

Important documents relating to the Naval Action remains classified and inaccessible. What makes the Indian Government classify and withhold information pertaining to the colonial era? What purpose would this serve? What possible reasons exist for delaying de-classification of the 1946 February Uprising by the ‘Naval Ratings’? That was indeed a milestone in India’s history.

Why hide!

Cartoons of the period

Illingworth is, for me, a recent discovery. Leslie Gilbert Illingworth was a visually eloquent cartoonist of the period. His craft is admirable – not for his originality.

Bernard Hollowood, who edited Punch from 1957 to 1969, agreed that Illingworth lacked passionate involvement and “produced very few of his own ideas.” As he recalled, at Punch “the chief political cartoons were produced communally, and the method suited Leslie.”

Illingworth was a mirror that captured the mood, prejudices, biases, opinions, of Britain, so well. His cartoons on India were full of misplaced imperial certitude – extremely gross in hindsight. A favorite subject for cartoonists in 1945-1955 period, was food shortages and rationing.

A Britain fattened by colonies facing a future without an empire. July 9, 1947. (John Bull holding scales. On one side is "Let us face the future" and on the other side, are Britain's problems of Clothing Ration, Housing Problem, Fuel shortage, Food Scarcity ...)

A Britain fattened by colonies facing a future without an empire. July 9, 1947. (John Bull holding scales. On one side is “Let us face the future” and on the other side, are Britain’s problems of Clothing Ration, Housing Problem, Fuel shortage, Food Scarcity …)


2015 – the post recessionary world

Posted in Business, Current Affairs, India, Pax Americana, politics by Anuraag Sanghi on December 6, 2009
Hobsons choice?

Hobsons choice?

 

What is on the table

Two of the G-7 countries are bankrupt – US and Britain. Their industrial base was supported by raw materials and captive markets – acquired by genocide, and the loot of centuries.

European banks are emerging from the credit crisis bigger than before, posing more risk to their national economies. BNP Paribas, Barclays and Banco Santander are among at least 353 European lenders that have increased in size since the beginning of 2007. Fifteen European banks now have assets larger than their home economies, compared with 10 lenders three years ago. (via European banks growing bigger, sowing seeds for the next crisis).

Concentration of power

What this growth has done is increase the concentration of risk, capital, power, manipulation into the hands of a few people. With Europe, USA and Japan dominating the Fortune 500 listing, with Super-mega corporations, the  outlook for dilution of power and risk seems bleak and remote.

The other risk is again the full-employment economic model. Mega corporations, which can be easily controlled at arm’s length by the State, dominate the economic sphere. Power is concentrated in the hands of less than 0.1% of the population. Less than 300,000 people control the US economy of more than 30 crore people (300 million).

Jobs for everyone

So, what happens to the 99.9% people who do not control the economy?

They are given jobs. They become employees, associates, apprentices, trainees, understudies, etc – who will fulfill the purpose of these 300,000 people-in-power – from the media and academia, public and private sector, NGOs and Government, bureaucrats and business managers.

Sleight of hand

And while our attention diverted by war, crisis, threats, the real game is being played somewhere else – out of sight and out of bounds.

Self employment, independence, small business are driven out of business by channeling increasing amounts of debt to organizations controlled by the O.1% of the powerful people.

This growth in banks beyond the size or the home economies signifies greater concentration of wealth – and not less. The world would do well to remember that East India Company was after all a company, a private company!

Capitalism was always about controlling capital

Capitalism was always about controlling capital

 

Public sector economies of Europe

The economies of France, Germany and Italy are practically run by public sector monopolies – or subsidized behemoths, who make survival of competitors difficult by their ability to sustain losses – based on Government largesse.

Spain and Britain have all but collapsed! Which way will the US jump – will it also go the public sector way – go the Spanish way? By the way, the national industry in Spain these days is prostitution!

Which bring me to another question!

The lure of ‘capitalism’ …

Why is the West so keen on calling these publc sector, subsidy driven regimes as Capitalism? Capitalism depended on looted capital and slave labour to prosper – resulting in the famous ‘laissez faire’ quip. Capitalists wanted and got ‘laissez faire’ capitalism – which was a ‘coda’ for unlimited slavery. The restrictions on laissez faire were actually restrictions on slaves.

Coverup .. Papered over .. Spit and polish ...

Coverup .. Papered over … Spit and polish …

Now under socialism, they get unlimited protection from ‘destructive’ competition. Which is being papered over by names like crony capitalism, free market capitalism. etc.,  etc.

Look at Spain and Britain

Spain’s national industry today is prostitution. Britain is floating on the sewage of the Bretton Woods bilge! After the multi-trillion dollar bailout, which has just begun, and with more than US$4 trillion in debt with China, Japan, Russia and India, neither is the outcome certain nor is the outlook bright.

Last but not the least, we must remember the power wielded by the Chartered Companies of Europe – another word for public sector.  East India Company was a public sector company!

The Rest of the World needs to be careful of these public sector monsters!

Public sector or oblivion

During the Great Depression, more than 19 auto companies (similar to the number of banks today) were folded into the Big 3. The Big 3 lived to fight for another 70 years. In their death throes, the US Big Auto is likely to go the way European auto sector has gone – public sector or oblivion.

Saddam lives (through his words)

The way it looks, it will mean the Mother Of All Mergers. At which point, there is no team of accountants in the world who can figure out what is where, or what condition what is in? And then the evasions, the lies the obfuscation can continue for some more decades?

Which model will US follow – public sector or closure? Subsidies or welfare?

Each time the music stops. there are fewer players

Each time the music stops, there are fewer players left

 

Real low … real truth (seen an oxymoron like that?)

 

The real question – who will pay for it?

Not the Americans! No siree. Definitely not.

Neither the American super-rich or the American welfare-poor? Not the American tax payers or the American tax evaders? Not the American Whites or the American Blacks?

It is the Chinese, the Russians, Indians, Brazilians and above all the Africans will pay for this! They have done, what bankers call non-recourse lending! The Chinese, Russians, Indians, Brazilians and the Africans, have no recourse. Who will the Chinese go to, for redeeming their US$2 trillion?

The bankrupt US of A? Welcome to the real world.

Transportation – US auto is down – but not yet out. It will limp along for few more decades.

Chinas ARJ21 - Advanced Regional Jet for the 21st Century

China’s ARJ21

Boeing will face fresh competition from BRICS – Brazil’s Embraer, Russia’s (Ilyushin)  and the Chinese (passenger jet programme). US electronics is stagnant – and fading power.

Computing Equipment – The US is still the prime force in the computing industry – though not on the manufacturing side. Chinese manufacturing is the dominant force in computer manufacturing.

Energy – US oil industry no longer dominates international markets the way they did in mid-20th century. The US Nuclear industry faces increasing competition from a public sector French and Russian industry – and India is planning to add its ‘frugal engineering’ muscle to this segment.

Higher education may save the day – What will sustain the competitiveness of the US industry – with out the dollar hegemony? The US education system is still significantly productive (measured in terms of patents, Nobel prizes, innovation, output, research papers, etc.). The US higher education system is notoriously hobbled by a weak school education system. How long will that advantage last – without an infusion of foreign talent?

The US entertainment industry remains the biggest in the West – and by many measures in the world also. Partially controlled by the Japanese, it however remains significantly competitive and dominating.

Agriculture is more fragile than estimated … The seemingly strong position of the US in agriculture is based on two aspects. Massive direct subsidies – of more than 8 billion dollars. And indirect subsidies of possibly another US$ 8 billion. Most of which goes to the 46000 farmers who account for 50% of the US agricultural production.

Communication technology – The communication sector has again seen the erosion of US competitiveness – with the domination of GSM technology seemingly solid for another 10-15 years. The long term direction for that industry anyways seems like IP-protocol systems. This may well result in commoditization of network equipment and terminal – and the increased importance of content. Low and medium switching technology may see greater commoditization with the eclipse of Cisco by the Chinese switch companies.

Green is still in the red … Environment engineering provides no major advantage to the US. Solar panels, wind energy equipment, hydrogen technology have all seen greater diffusion of leadership and market share. It may not give greater opportunity to the USA.

Finance and banking – The global financial markets were dominated by the US organizations in the past – but with the global financial crisis and the end to dollar dominance may see reduced clout for US firms. Their position will become broadly similar to current position of Swiss banks – mildly competitive, solid history, fading reputation.

Outlook – With such an outlook over the next 10-25 years, what the US leadership may focus on is Arctic oil. Oil will remain a strategic asset only with high prices (slower production increase and faster demand growth) and if no other energy source appears. Oil finds in the Atlantic and Pacific republics may spoil the party – for instance, Cuban oil.

Much like the respite of the North Sea oil to Britain, Arctic oil may provide a temporary halt to the slide in US economic dominance.

If the US can lay its hands on a significant part of it!

France, Germany, Canada, Italy  and Australia (not in G7) are tethering on the brink – under the weight of their social security system, and most of their business is in the public sector. A geriatric Japan is dependent almost entirely on exports to these declining seven. Japan’s investment in India and China has been negligible.

The US strategy

Most ‘future-of-China’ debates are incomplete as they miss a very important element -  the American template for co-opting client states. Let us call this as US-Client-Acquisition Programme (USCAP). The outcome and China’s economic future is tied to access to US markets, capital, technology, businesses – very closely.

Club de USA. (Cartoonist – Gary Varvel; publication date – 30-10-2008; source and courtesy – thedailynews.com). Click for larger image.

Club de USA. (Cartoonist – Gary Varvel; publication date – 30-10-2008; source and courtesy – thedailynews.com). Click for larger image.

The US has successfully executed US-Client-Acquisition-Programme (USCAP) a most out-sized ‘conquest’ in history. By using these economic levers, it has successfully created client states across Europe, SE Asia, Japan, etc. Some economies have taken the bait, used US incentives and become ‘successful’ client states.

Some prospective  clients states have fallen by the wayside. South American failures, the Middle East, Pakistan, post-Gorbachev Russian reluctance have been signal failures of  American recruitment.

The 2 trillion trap

Similar to the success of the Europeans, the Japanese, Koreans and the Asian Tigers, China too has embraced the US-client state model. Booming exports to the US, massive FDI by the US in the Chinese economy, has put China in the earlier position of Japan and Korea – prime sub-contractors to the US economy. Where the Chinese economy seems to ‘partially different’ is the military side. On foreign policy and ‘American’ culture, the Chinese have been ’superficially’ resistant and nominally ‘assertive’.

The Chinese miracle, much like the ASEAN, Japanese and European miracles before, is using exports to the USA as a stepping stone. Chinese growth and expansion depends on access to the US markets and a devalued currency. For how long will the US allow the Chinese to do that? Another 5 years – or is it 10 years.

As for India

India is unlikely to drastically change its trajectory.Its economic success will continue evenly, based on its entrepreneurial class. Its public sector engagement will reduce.

It is likely to improve its relation with China, Russia and the US. EU will continue with own perception of self-importance. The crucial factor defining India’s position will be Pakistan. Will India continue whine about Pakistan – or will take some covert /overt action against the twenty off terrorist training camps? Will it take charge of stabilizing Afghanistan?

China’s assertiveness will lessen in the face of resolute Indian actions – and not moral posturing or protests. While the moral under pinning is certainly essential, the Indian position will need reinforcement.

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