Saturday, November 15, 2008

Superpower Two

A friend called to say that the superpower post was too oblique. There was a need to explain. So here goes.

The post was aimed primarily at those concerned by Barack Obama’s campaign promise to ‘do something’ to discourage outsourcing and encourage local employment. This was to be done through tax incentives because in a market economy not much else is available to the U.S. government.

Also inspired by
  • Those who keep talking about India as an emerging superpower when a large percentage of people (exact numbers are irrelevant) go hungry to bed, children go without education, sick go without healthcare, elderly have no financial security etc. You know the list. We could make a substantial difference just by stopping collection of data on poverty and wasting time and money on debates and conferences about what actually constitutes poverty. And diverting the money to improving any of the many areas crying for resources.
  • The Thackeray clan’s fulminations against those who come seeking a living in Bombay. South Indians earlier and north Indians now, doing jobs no one else really wants. Gujaratis and Parsis who create jobs are never targeted.
  • And finally, by the HDFC life insurance advertisement where a bald man seems to be planning to send his wife to Singapore to work as a maid. Because HDFC life insurance did not exist when he was working and should have started a retirement plan!

Back to Obama. This is one area where there is not much that he can do or will want to do. In fact in a global downturn more and more companies will look to shave costs to survive. Tax incentives can’t help because the corporate tax rate is lower than the cost differential. And Indian costs can be reduced from current levels by about 50%.

Given job loss or pay cut everyone will opt for the latter. Lower income differentials and less social tension all round. My cardiologist might start earning more than my semi-literate uneducated phone banker once again.

As far as superpowers are concerned, the real power lies not in Indian Navy shooting at a few unemployed people playing pirates with toy guns off the coast of Somalia or in the ability of the good Dr. Singh to switch off the phone lines to America.

Real power lies with buyers and sellers of goods and services who can dictate pricing for what they buy, think Nike, and also for what they sell, think Boeing. This, dear reader, comes from creating products and services others want and covet. And then getting slave labour, by whatever name called, to make those in sweatshops of China or deliver from cubicle pits of India.

Previous: The Real Superpower

Friday, November 14, 2008

The Real Superpower

The lady who manages our household is from the Coorg district of Karnataka. Racially the Coorg do not seem to have much in common with the rest of the country, least of all with the south where they are ensconced. Legend has it that the Coorg are descendants of the remnants of Alexander’s army. Coorg is the only district in India the residents of which have the right to bear arms, and they do. They do not yet have, however, any stated ambition to go independent.

Our lady manager has been with us for twenty years now planning our meals, preparing them, managing our laundry, making sure we take our respective vitamins or, when sick, medication and generally looking after our welfare. She also answers the phone and manages all outsourced services like ironing, plumbing or electrical repair. She is literally invaluable, no one knows how much she is paid.

Over her longish association with us, a lot of her siblings, other relations and friends have moved into Bangalore and are now gainfully employed in industry and businesses ranging from healthcare to financial services as also in the armed forces. They all come in and she helps them out in various material and other ways until they get, so to speak, their green card.

In the process Coorg has become a superpower. Much as India has over the last few decades. We do it by sending our best and brightest to foreign shores . We also do it by sending the second best to call centres to answer phone calls from rich customers of rich companies from rich countries. We solve their tricky tech problems or answer stupid questions about their credit cards. We write code for software conceived and planned by others in places where local culture permits innovation to happen.

In the recent economic downturn, we as a family have taken a bit of a haircut. As has India.

One thing is clear, however. Coorg has nothing to fear. We need our manager and her cohorts. Much as the developed world needs the "people power" India provides. In spite of recent big talk of India emerging as a "Superpower", we know who calls the shots when the chips are down, as does our house manager.

Next: Superpower Two