A general election in India starts today. 970m Indians, more than 10% of the world’s population, will head to the polls in what will be the largest election in history for the Lok Sabha (House of the People) parliamentary elections. The poll will spread across India and take up to 4 June to complete. Opinion polls suggest that Prime Minister Narendra Modi, leader of the Hindu nationalist Bharatiya Janata Party (BJP), and his coalition will win a third successive 5-year term, and win by some distance. The main challenge to the BJP comes from a coalition of political parties headed by the Indian National Congress, the biggest opposition party. More than two dozen parties have joined to form the Indian National Developmental Inclusive Alliance ("India" for short). Key politicians in this group include Congress president Mallikarjun Kharge, as well as siblings Rahul and Priyanka Gandhi, whose father was the former prime minister Rajiv Gandhi. The BJP was formed by members of what was basically a Hindu religious fascist party, the Rashtriya Swayamsevak Sangh (RSS), an organisation modelled on Mussolini’s Black Brigades. Modi was a long-time member of the RSS who then moved seamlessly into the BJP. After winning power in 2014, Modi has cemented his control of government. It is now seen as ‘business-friendly’, but the BJP is still dedicated to turning a multi-ethnic and multi-religious India into a Hindu state, where minorities, particularly Muslims, will be reduced to second-class citizens. With increasing confidence, the Modi government has suppressed any public dissent by liberal democrats and socialists against this trend. Many opposition politicians have been imprisoned on trumped-up charges and prevented from participating in the election and in public debate. Opinion polls show that the BJP alliance will probably win this election with an increased majority, possibly enough to get a two-thirds majority in parliament, enabling the next government to push through further restrictions and laws against dissent. India’s reputation as the most long standing and largest ‘democracy’ in the Global South is being broken up. How is it possible for the BJP and Modi to be so popular? First, because of the bulk of the BJP’s political support comes from the rural and more backward areas of this huge country who have not benefited from the strident rise of Indian capitalism in the cities. These areas are bulwarks of Hindu nationalism, incentivised by fear of muslims. The second reason is the total failure over the decades of the main capitalist party and standard bearer of Indian independence, the Congress party, to deliver better living standards and conditions for the hundreds of millions, not only in the country but in the city slums. Congress appears to millions as the party of the establishment controlled by a family dynasty (the Gandhis), while the BJP appears to many as the populist party of the forgotten people. The Modi government makes much of its handouts to the poorest. Welfare schemes have been expanded such as providing free grain to 800 million of India's poorest, and a monthly stipend of 1,250 rupees ($16; £12) to women from low-income families paid into half a billion new bank accounts, along with free gas connection in millions of houses for the poor and over 40 million toilets constructed. But in reality, the BJP and the Modi government is fully integrated and supportive of Indian capital, especially big capital. PM Modi has made the economy a major part of his election pitch, pledging at a rally last year to lift the country’s economy “to the top position in the world" should he win a third term. The Modi’s government's key policy is Viksit Bharat 2047—a plan to make India a developed nation by 2047, 100 years after independence, something China is targeting for 2030. The Indian media and Western economists laud the strong economic growth that India is apparently enjoying under the Modi government. According to the official figures, Indian real GDP grew 8.4% yoy in the last quarter of 2023 and 7.6% over the whole year, up from 7.0% in 2022. So ecstatic are mainstream economists about the success of Indian capitalism under Modi that talk of his neo-fascist past and current repressive measures are ignored. Instead, all the talk is of India ‘catching up’ with China and even surpassing its real GDP soon. For example, Goldman Sachs projects India will have the world’s second-largest economy by 2075. The forecast is that India will grow even faster while China’s growth slows and soon India will contribute more to global growth than China. India will take over China’s lead in manufacturing and technology and thus prove that a privatized, free market economy can triumph over a state-led planned one that is China. According to Bloomberg Economics, India could become the world's No. 1 contributor to GDP growth as early as 2028 as India’s economic growth will accelerate to 9% by the end of this decade, while China will slow to 3.5%! But all this is just hype. Take the growth figures. The perennial cry from Western economists when they get the growth figures for China is that they are faked. But actually, it is India’s national statistics office that is being ‘economical with the truth’. GDP figures contain dubious categories like ‘discrepancies’. These refer to the difference between real GDP growth of about 7.5% a year and real domestic expenditure growth of just 1.5% a year. They should be the same theoretically, but they are not – and the national statistical office ignores the latter. Part of the reason for the ‘discrepancy’ is that India’s government statisticians are ‘deflating’ money GDP into real GDP by a price deflator based on wholesale production prices and not on consumer prices, so that the real GDP growth figure is much higher than the real increase in spending. Also, the GDP figures are not ‘seasonally adjusted’ to take into account any changes in the number of days in a month or quarter or weather etc. Seasonal adjustment would have shown India’s real GDP growth well below the official figures. What exposes the unrealistic figures the most is a recent paper on India’s staggeringly extreme inequality of wealth and income. The World Inequality Lab finds that “the present-day golden era of Indian billionaires has produced soaring income inequality in India—now among the highest in the world and starker than in the U.S., Brazil, and South Africa. The gap between India’s rich and poor is now so wide that by some measures, the distribution of income in India was more equitable under British colonial rule than it is now.” The top 10% of the Indian population now holds 77% of the total national wealth. Between 2018 and 2022, India is estimated to have produced 70 new millionaires every day. Billionaires' fortunes increased by almost 10 times over the last decade and their total wealth is higher than the entire national budget of India for the fiscal year 2018-19. The current total number of billionaires in India is 271, with 94 new billionaires added in 2023 alone, according to Hurun Research Institute’s 2024 global rich list.. That’s more new billionaires than in any country other than the US, with a collective wealth that amounts to nearly $1 trillion—or 7% of the world’s total wealth. A handful of Indian tycoons, such as Mukesh Ambani, Gautam Adani, and Sajjan Jindal, are now mingling in the same circles as Jeff Bezos and Elon Musk, some of the world’s richest people. The report also found that the rise in inequality had been particularly pronounced since the BJP first came to power in 2014. Over the last decade, major political and economic reforms have led to “an authoritarian government with centralization of decision-making power, coupled with a growing nexus between big business and government,” the report states. This, they say, was likely to “facilitate disproportionate influence” on society and government. In contrast, many ordinary Indians are not able to access the health care they need. 63 million of them are pushed into poverty because of healthcare costs every year - almost two people every second. Indeed, it would take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment company earns in a year. While the country is a top destination for 'medical tourism', the poorest Indian states have infant mortality rates higher than those in sub-Saharan Africa. India accounts for 17% of global maternal deaths, and 21% of deaths among children below five years. Rural distress, stagnation and falling farming incomes have led to a number of protests by farmers. According to Samyukta Kisan Morcha, an umbrella of farm unions, over 100,000 farmers have committed suicide in the last ten years of Modi's rule. India ranks 111th of the 125 nations in the Global Hunger Index (2023) report. India is home to over a third of the world's malnourished children, which is not only a health crisis but has a wider impact on the economy. A 2023 joint report by FAO, UNICEF, WHO and WFP, found that 74% of the population cannot afford healthy food. The WID averaged out national income growth between rich and poor. On that measure, growth in incomes in India is nowhere near the hype levels surrounding real GDP growth. Average real income growth in India is around 3.6% a year compared to the 6-8% claimed for real GDP growth. The idea that India is or will close the gap with China is a pipedream. Here the WID paper shows the gap between China’s average income, and that of India and Vietnam. Even Vietnam is holding its advantage over India. India’s $3.5 trillion economy remains dwarfed by the $17.8 trillion Chinese economy. It would take a lifetime for India to catch up with its shoddy roads, patchy education, red tape and a lack of skilled workers. The Indian economy is failing to create jobs, especially those that would support a dignified standard of living. Apart from public administration, the most rapid income growth by far this past quarter (at 12.1%) was in finance and real estate. But this neo-liberal feature of Indian development, now augmented by “fintechs,” generates only a handful of jobs for highly qualified Indians. Among other growth sectors, construction (helped by the government’s infrastructure drive) and low-end services (in trade, transport, and hotels) mostly create financially precarious jobs that leave workers one life event away from severe distress. The labour force participation rate in India has declined over the last 15 years. Under Modi, less than half the adult working population is employed. Two-thirds of Indian workers are employed in small businesses with less than ten workers, where labour rights are ignored – indeed most are paid on a casual basis and in cash rupees, the so-called ‘informal’ sector that avoids taxes and regulations. India has the largest ‘informal’ sector among the main so-called emerging economies. India’s post-COVID manufacturing performance has been particularly weak. This reflects the country’s chronic inability to compete in international markets for labour-intensive products – a problem made worse by the slowdown in world trade and weak domestic demand for manufactured products. Overall, government spending on health has fallen and now hovers around an abysmal 1·2% of gross domestic product, out-of-pocket expenditure on health care remains extremely high, and flagship initiatives on primary health care and universal health coverage have so far failed to deliver services to people most in need. Another contentious issue is the lack of credibility of India's continuing claim that only 0·48 million people died as a result of the COVID-19 pandemic, whereas WHO and other estimates are six to eight times larger (including excess deaths, most of which will be due to COVID-19). India is right down at the bottom in terms of government spending. Only South Africa which is in a serious economic situation is lower than India. And there is the issue of basic resources for India’s 1.4 billion people. Mechanically pumped groundwater now provides 85% of India’s drinking water and is the main water source for all uses. North India’s groundwater is declining at one of the fastest rates in the world and many areas may have already passed “peak water”. The World Bank predicts that a majority of India’s underground water resources will reach a critical state within 20 years. In pre-COVID 2019, China invested about 6.5% of its GDP in infrastructure development, while India invested just 4.5%. About 78% of Indians are literate — but the percentage drops to 62% for women. On the other hand about 97% of Chinese nationals are literate. About 1.6 million Indians are enrolled in vocational education; in China it’s about 5.6 million people. Productivity growth has been falling for most of the years under the Modi government. Since Modi came to office, India's average labour productivity growth has been 4% a year; China's 6.3%. Productivity would rise if generally underemployed peasants could move to the cities and get manufacturing jobs in the cities. This is how China transformed its workforce, to raise productivity and wages. China has done this through state planning of labour migration and huge infrastructure building. India cannot; its rate of urbanisation is way behind that of China. As a result, employment growth is pathetically slow. An estimated 10-12m young Indian people are entering the workforce each year but many cannot find jobs due to their paucity or because they lack the right skills. And just compare India’s per capita GDP with that of China. It’s all you need to know about ‘catching up’! Note that China and India had more or less the same per capita GDP back in 1990. And if the post-pandemic period is anything to go by, the ‘China gap’ is widening, not narrowing. One good measure of a better life is the World Bank’s Human Development Index (HDI). The HDI covers economic growth, life expectancy and educational attainment. If we look at the largest so-called emerging economies by population, including the BRICS (Brazil, Russia, India, China and South Africa), China has achieved the greatest improvement in its HDI of all countries. From a lowly 0.48 in 1990, China’s HDI reached 0.77 in 2021, a rise of 59%. Compare that to India, which started pretty much at the same HDI as China but reached only 0.63 in 2021, a rise of 46% but still way less than China. Rather than ‘catch up’ and surpass China, it is more realistic to expect that India will stay in what the World Bank has called a ‘middle-income’ trap, where the vast majority of population remain in poverty while the top 10% live well and spend, but there is no investment or drive to deliver employment, training, education and housing for the rest. The key for Indian capitalism is the profitability of its business sector. The profitability of Indian capital took a huge plunge in the 1970s, as profitability did globally. Under successive Congress-led governments, neo-liberal policies were adopted to drive up profitability. Then came the Great Recession and the ensuing Long Depression and profitability and growth began to fall back. Electoral support for Congress drained away as a result and Hindu nationalism emerged. The BJP claimed that the reason for poor growth, rising inequality and stagnant living standards was 'the enemy within' (muslims) and 'the big state' as represented by a corrupt Congress family dynasty. Modi was the new saviour. But since then Modi has just endorsed policies agreeable to Indian big business: privatisation, cuts in food and fuel subsidies and a new sales tax, a tax that is the most regressive way to get revenue as it hits the poor the most. With Modi set to win another five-year term, the ‘success’ hype will be intensified, but so will reductions in the right to dissent and oppose the nationalist government. And it will be business as usual for India’s billionaires. The Indian Raj will rule. |
Facts For Working People
If you have opinions about the subject matter of posts on this blog please share them. Do you have a story about how the system affects you at work school or home, or just in general? This is a place to share it.
Friday, April 19, 2024
Michael Roberts. India: Modi and the rise of the billionaire Raj
Wednesday, April 17, 2024
Seymour Hersh: A MILITARY SOLUTION TO A POLITICAL PROBLEM
How the Pentagon engineered a fake war to prevent a real one
Paid
I’ve spent much of my career reporting on the American military’s misdeeds and worse, especially during the Vietnam War, but it’s time now to applaud the brilliance of the Pentagon planning staff and the operational officers who did what America assured Iran’s religious and military leadership it could do: allow Iran to respond to yet another Israeli assassination by flinging more than three hundred drones and missiles toward Israeli targets that as many as possible would be shot out of the sky before hitting ground there. It was a huge gamble, and it paid off.
The Pentagon was essentially resisting—a word I choose to use—the foreign policy of the Biden White House and NATO by secretly approaching one of Iran’s closest allies—Russia—and persuading a senior general there to reassure Ayatollah Khamenei, Iran’s 84-year-old supreme leader, that America had the know-how to make the strategy succeed.
Imagine it: two of the Biden administration’s most entrenched enemies—Russia and Iran—trusting and working with the Pentagon and its leadership to prevent a deadly retaliation for yet another Israeli assassination of an Iranian general and six other Iranians in Damascus.
I am not allowed to name the American senior military officers and advisers who made the unusual faux missile attack happen. But it’s important to say that President Joe Biden, whose foreign policy team was not involved in the process, accepted the high-risk plan and publicly urged Prime Minister Benjamin Netanyahu, whose political career and personal freedom depend on keeping the war in Gaza going, and the rest of the Israeli leadership not to respond to Iran. That they might launch a counterattack remains a possibility, of course, according to press reports in Israel.
“The Pentagon planning staffs were asked to come up with a military solution to a political problem,” one involved official told me. “Otherwise the Ayatollah would attack and Bibi would do ‘his thing’ in response. We had to get involved now, and not later. And so we thought about where we are and where we wanted to be. And we got to be involved now, and not later. That meant we had to control the Iranian response.”
The obvious fear was that Netanyahu’s response to a successful drone and missile attack would be, as in Gaza, overwhelming. A major Israeli retaliation could easily lead to an unwanted war in the Middle East.
The senior planning staffs throughout the Pentagon had direct contacts with their peers throughout Europe, and there was immediate consultation with air force leaders in Europe that circumvented dealing with the political leadership there. “And who knew the Iranians the best?” the official asked rhetorically: “The Russians and the Brits.” Iran’s strongest ties in Europe are in fact with Britain and Russia, whose military leaders shared the concern about the extreme danger of an Iranian response to Israel.
There was an informal chat between the Americans and a ranking general in Russia who was asked what he thought Iran wanted. The answer was very Russian, so I was told: “They just want revenge and to prove that their dicks were just as big as anyone else’s.” There was a similar, and more conventional, chat with a senior British officer.
Out of these conversations evolved the ingenious plan: Why not get the air forces of our allies in Europe and the Middle East to agree to work together, under American leadership, and, with Iran’s approval, take advantage of the rapid progress in anti-missile and anti-drone defenses to let the Ayatollah fire off this missiles and have his revenge, while understanding the that air forces of America, Europe, and the Middle East would track and destroy them all?
During the secret planning, the official said, America’s allies were told: “We are going to share all the information about the fired Iranian drones and missiles we collect.” There was a tough session with a senior Israeli official who was informed, the American official said, that Israel had two options: one,”win easy” and let the American coalition destroy the missiles; or two, “lose the hard way” and respond with violence to the failed attack. “If you chose the hard way,” the Israeli was told, “you’re on your own.”
Throughout the process, Pentagon leaders were assembling their plan without formally consulting President Biden or anyone in the White House. “The White House only knew that the Iranians” wanted to respond in kind to the Israelis, the official said. At that early point in the military planning, he added, “the White House had no need to know more.”
It was believed that there would never be formal approval for such a radical strategy, although Biden, to his credit, when later told that the Ayatollah had agreed to mute his revenge, publicly joined in urging the Israelis not to respond to the failed Iranian missile attack.
The drones and missiles fired off by Iran were easy targets. An American fleet of Navy attack planes were augmented by fighters from Jordan, Britain, France, Saudi Arabia, and Israel, whose access to nearby air bases enabled them to get refueled and stay on the defense and in the air for hours. The Iranian leadership conveniently fired off its missiles and drones over a nine-hour period, adding to the success of the missile and drone hunters: the long interval gave some of the fighters a chance to refuel. Two American AWACs—specially equipped E-3 sentry planes—that had the most advanced warning and tracking systems were on station to help guide the missile-hunting aircraft to their targets. (The US Navy utilized its own versions of the AWACs: E-2 Hawkeyes). The American-led operation was a total success, with only a few weapons penetrating Israel’s borders. The only known casualty was a seven-year old Bedouin girl. She was struck and severely injured by shrapnel that fell through the roof of their home in the Negev desert, near Israel’s important Nevatim air base, where advanced aircraft are stationed that are capable of delivering nuclear weapons. It is thirty kilometers northwest of Dimona, the Israel nuclear reactor that has been churning out nuclear bombs for more than five decades.
I was told by a knowledgeable Israeli that officials at the airfield were explicitly advised, presumably by Iran, that the missiles that fell near or at the airfield were not meant for the reactor at Dimona. The Israeli military officially released photographs of the damage to the grounds at the air base.
The operation “had to have a zero scenario,” the American official told me, in terms of insuring that an Iranian ballistic missile did not escape the international armada and strike a major city in Israel. But, he added, “the guys who fly have a lot of faith and believe they can do anything with the AWACs. There was no margin of error.
“It was gutsy.”
Germany buries the evidence of complicity in genocide: Nicaragua exposes it
Reprinted from the Nicaraguan news outlet, Tortilla Con Sal
John Perry, April 16th 2024
Dr, Ghassan Abu-Sittah (Photo: Palestine Studies)
Last Thursday, Dr Ghassan Abu-Sittah, the British-Palestinian war surgeon, gave his first address as the newly-appointed rector of Glasgow University, chosen in recognition of his work at al-Shifa hospital in Gaza. The following day he flew to Berlin, where he had been invited to address a major conference about Palestine. On arrival he was taken away by police, interrogated for several hours and eventually told he had to leave Germany and wouldn’t be allowed to return until at least the end of April.
Any attempt to speak to the conference via Zoom could result in a fine or even a year’s prison sentence. By the time he was released he couldn’t have taken part in the conference anyway, since it had been already invaded by at least 900 police and closed down. Berlin’s mayor said that it was ‘intolerable’ that the conference was taking place at all.
Speaking about his experience
afterwards, Dr Abu-Sittah referred to the fact that Germany had – also
last week – been defending itself at the International Court of Justice
against charges by Nicaragua that it is an accomplice to genocidal war.
‘This is exactly what accomplices to a crime do’ he said. ‘They bury the
evidence and they silence or harass or intimidate the witnesses’.
Watching the live feed of Germany’s lawyers at the Hague a few days earlier had been an odd experience. They gave the impression of being affronted that Germany had been accused of such crimes, especially by a small country which, they argued, had no stake in the case. Also, Israel could not yet be said to be committing genocide, because the ICJ has not yet determined the case brought against it by South Africa, which Germany had supported Israel in contesting. Because Israel was not party to the new case, it should simply be thrown out.
Some research might have given them a better appreciation of Nicaragua’s
credentials to bring the case. Its mutual solidarity with Palestine
goes back a long way. It also has more experience at the Hague than
Germany, including its pioneer action against the US in 1984, when it
won compensation of £17 billion (that was never paid) for the damage
done to Nicaragua by the US-funded Contra war and the mining of its
ports. Carlos Argüello, who led the case last week and many of its
previous cases, said that Nicaragua offered its expertise to Palestine
and it had already joined in with South Africa’s action. It had decided
to target Germany, the second biggest supplier of arms to Israel,
because the US, the biggest supplier, is outside the court’s
jurisdiction on this issue.
Argüello explains
that the object is to create a precedent with wider application – that
countries must take responsibility for the consequences of their arms
sales to avoid them being used in breach of international law. Germany’s
argument that legal action cannot proceed before South Africa’s earlier
case is resolved is nonsense, since countries have an obligation to
prevent genocide, not merely wait until it is proven to be happening. In
any case, Germany must have been aware of the numerous warnings from
senior UN officials of the imminence of genocide in Gaza, which began as
early as October 9th.
Germany claimed that it has a “robust legal framework” in place to
ensure its arms exports are not misused, and that sales to Israel are
now restricted to non-lethal equipment. But any supplies being sent to a
genocidal army are helping to sustain its criminal actions, Nicaragua
replied.
Much was made of Germany’s historic obligations due to its Nazi history,
but Argüello argues that these should relate to the Jewish people, not
the Israeli state. He adds that Germany’s past might also oblige it to
help prevent genocide wherever it might occur. Its government spokesman
on the South Africa case had claimed that Germany is ‘particularly committed to the Genocide Convention’.
The economist Yanis Varoufakis was also banned from speaking in Berlin. He planned to conclude his speech
by telling German politicians that ‘they have covered themselves in
shame’ through their unflinching support for Israel’s atrocities. Carlos
Argüello echoes this point when asked
whether a decision by the ICJ can actually be enforced: we have to
mobilise shame, he says, ‘…that’s the hope with this. Perhaps being too
idealistic, but it’s the only weapon we have’.
Monday, April 15, 2024
America’s sick obsession with China will ruin itself and the world
America’s sick
obsession with China will ruin itself and the world
The
US fixation on a China threat distracts it from its serious domestic
challenges and holds the world back from addressing critical challenges,
from climate change and wars to AI risks
Peter T. C. Chang
Published: 9:30am, 14 Apr 2024
The US is gripped by a debilitating fear of China, and unless this Sinophobia is addressed, it could lead to profound uncertainties for the world.
Earlier this month, during their first phone conversation since the San Francisco summit
last November, US President Joe Biden discussed with Chinese President Xi
Jinping their collaboration on pressing issues such as narcotics control,
climate change and artificial intelligence (AI), even as he defended the
imposition of hi-tech sanctions on China.
Last month, the House of
Representatives voted through a bill that could force a TikTok
ban in the US, a move that saw bipartisan support and reflects the widespread
apprehension towards China. President Biden has pledged to sign the bill into law once it is
approved by the Senate.
Clearly, despite the San Francisco summit, US-China ties have yet to
thaw. Marked by profound mistrust, the relationship continues to be defined by
competition, rather than cooperation.
Meanwhile, the crises in Ukraine and
Gaza persist with no foreseeable resolution. Ukrainian President Volodymyr
Zelensky has reached out to President Xi about a proposed peace summit, while leaders in the Arab world are
open to Beijing’s help to broker a two-state solution to the Israeli-Palestinian
conflict. China has declared its commitment to leverage its influence to
facilitate a resolution to both crises.
Unfortunately, Washington still sees
China as a threat to its global dominance. During his call, Biden cautioned Xi
against escalating tensions across the Taiwan Strait and the South China Sea. Separately, several Republicans
have called for America’s withdrawal from the Ukraine war to reallocate
military assets towards countering purported rising threats from China.
Herein lies the paradox confronting China as it considers
taking on a mediating role. Why would Beijing mediate for peace in Europe and
the Middle East when this would free the US to pivot towards the Asia-Pacific
to oppose China?
At the San Francisco summit last year, Xi and Biden struck a deal wherein Beijing agreed to limit the export of fentanyl precursor chemicals, and Biden reciprocated by easing some of its sanctions. The transaction underscores Xi’s insistence on a fundamental principle of cooperation: the quid pro quo expectation.
Like any other party, Beijing anticipates reciprocity for
its help. Therefore, if the US seeks China’s collaboration in addressing the
Ukraine and Gaza crises, it must reciprocate by mitigating the risk of open
conflict in the Asia-Pacific.
Despite Xi’s commitment, however,
experts doubt that restrictions on precursor exports alone can effectively curb
the US opioid epidemic.
This scepticism arises from
the recognition that multiple factors fuel the American narcotic addiction,
including inadequate regulation and weak oversight leading to over-prescription,
pharmaceutical companies’ aggressive marketing strategies and socioeconomic
distress.
The opioid crisis is a symptom of an ailing America haunted
by fear. The nation, deeply divided, is wrestling with crises rooted in racial,
religious and socioeconomic disparities. Adding to these complexities is the
trepidation that adversaries like China could capitalise on these
vulnerabilities.
Indeed, mired in a bitter rivalry, the US and China find
themselves trapped in a cycle of distrust, where actions by one often reinforce
suspicions in the other. In the US, this escalating mistrust has stoked
apprehensions about China’s allegedly widening array of threats to homeland
security.
These fear range from unsubstantiated
accusations of spy balloons, shipping cranes deployed as Trojan horses, the
weaponisation of Chinese-made electric vehicles on US highways and
even conspiracy theories linking a Chinese cyberattack to the collapse of the
Baltimore Bridge.
The US is gripped by a debilitating Sinophobia, a pervasive fear that
could result in misdiagnosing problems, with potentially devastating
consequences. For instance, the singling out of TikTok over security concerns has
been widely criticised as a distraction from an industry-wide issue.
The spotlight on TikTok’s potential impact on the 2024 US presidential election is also diverting attention from more critical issues plaguing America’s increasingly fragile democracy.
The reality is that America is deeply polarised, and the election is unlikely to mend its fractured social fabric. Should Donald Trump secure victory in the November presidential election, he has vowed retribution for his enemies. If he faces defeat, the possibility of another uprising akin to the January 6 Capitol riot cannot be dismissed.
Merely focusing on external threats will not resolve the
profound issues vexing America. The origin of these problems is intrinsic to
the US and demand internal solutions, necessitating a critical process of
self-reflection and self-correction.
On the global stage, the era of US
unipolarity as the sole superpower has ended. China is playing an increasingly
influential role in reshaping the world order into a more inclusive, multipolar
one.
However, the US persists in viewing China as a challenge to the universal
principle of rights and liberty. This fixation on the China threat is
deflecting attention from the real and present dangers to world peace, notably
the wars in Ukraine and Gaza, which risk escalating into broader regional
conflicts.
The mistrust between the US and China ultimately has far-reaching consequences for humankind, undermining our collective ability to respond effectively to the pressing challenges posed by climate change and the potential risks associated with AI.
The US urgently needs to adopt a more balanced assessment of China. Neglecting to do so risks complicating efforts to resolve America’s domestic predicaments, disrupting the reconfiguration of the world order, and leaving us vulnerable to global crises that could adversely affect the fate of humanity.
Peter T.C. Chang is a research associate at the Institute of China Studies, University of Malaya, Kuala Lumpur, Malaysia
Sunday, April 14, 2024
Michael Roberts: The Tepid Twenties
The semi-annual meeting of the IMF and World Bank starts this week. The agencies and their invited guests will discuss the state of the world economy and the challenges ahead and present policy solutions. At least that’s the ostensible idea.
Kristalina Georgieva, managing director of the IMF, has just been re-appointed for another five-year term unopposed. In previewing the meeting, she outlined how the IMF sees the world economy in 2024 and through the rest of this third decade of the 21st century. She offered a dismal analysis. Ahead was a “sluggish and disappointing decade”. Indeed, “without a course correction, we are … heading for the Tepid Twenties”. Her comments prefaced the release of the IMF’s latest World Economic Outlook including its long-term forecast for the world economy.
It makes for sober reading. Let me quote: “Faced with several headwinds, future growth prospects have also soured. Global growth will slow to just above 3 percent by 2029, according to five-year ahead projections. Our analysis shows that growth could drop by about a percentage point below the pre-pandemic (2000-19) average by the end of the decade. This threatens to reverse improvements to living standards, and the unevenness of the slowdown between richer and poorer nations could limit the prospects for global income convergence.”
“A persistent low-growth scenario, combined with high interest rates, could put debt sustainability at risk—restricting the government’s capacity to counter economic slowdowns and invest in social welfare or environmental initiatives. Moreover, expectations of weak growth could discourage investment in capital and technologies, possibly deepening the slowdown. All this is exacerbated by strong headwinds from geo-economic fragmentation, and harmful unilateral trade and industrial policies.”
The main driver of growth in world output is through the increased productivity of labour and that has been slowing. And this “is likely to continue to decline, driven by challenges such as the increasing difficulty of coming up with technological breakthroughs, stagnation in educational attainment, and a slower process by which less developed economies can catch up with their more developed peers.”
The IMF is making it starkly clear that the capitalist mode of production is failing to deliver on increased productivity, essential to meet the social needs of 8bn humans. And why? First, because innovation is fading. In mainstream economics, this is measured by what is called total factor productivity (TFP), the amount of productivity that cannot be explained by investment in means of production or in employing labour – it’s a residual to complete the total level of productivity. In this decade so far, global TFP growth has slowed to its lowest rate since the 1980s.
The IMF is also saying that failure to invest sufficiently in what capitalist economists like to call ‘human capital’ has led to no improvement in the skills of the global workforce. And most interestingly, the IMF admits that the gap between the rich, technically more advanced capitalist economies (the imperialist bloc in effect) and the poor, less advanced periphery, where 80% of humanity lives, is not narrowing at all – contrary to the continual claims of many mainstream economic studies.
The world economy’s expansion has been slowing down particularly since the end of the Great Recession of 2008-9, the IMF says, echoing my own analysis of what I have called a Long Depression in the major capitalist economies.
In particular, business investment, the major driver of economic growth in capitalist economies, has “tumbled after 2008, and in 2021 it fell by about 40 percent of its pre-global-financial-crisis trend”. And what is the reason for this decline? The IMF says: “since 2008, Tobin’s q, an indicator of firms’ future productivity and profitability expectations, has decreased by 10 to 30 percent on average, contributing to the bulk of the explained decline in investment in both advanced and emerging market economies.” This is a roundabout way of saying that investment growth by capitalist companies has slowed because they have not been getting the levels of profitability they expected, as the graph below shows.
So slowing growth in global real GDP, according to the IMF, is down to: 1) slowing growth in the world’s available labour force, projected to fall to just 0.3% a year; 2) stagnant business investment; and 3) weakening innovation. By the end of this decade (and this assumes no major global slump, as suffered in 2008 and 2020), global growth will fall to 2.8% a year for the first time since 1945.
What are the components of this second decade of depressionary slowdown, according to the IMF? The main factor up to now has been that ‘resources’ have been ‘mis-allocated’. What the IMF means is that the free market system is not allocating the means of production, technological innovation and labour supply to the most productive-enhancing sectors. That misallocation is losing 1.3% pts of global growth each year, the IMF estimates. The IMF does not say this, but when capitalist investment increasingly goes into financial and property speculation, military spending, advertising and marketing, etc, it’s not surprising that there is such a ‘misallocation’ of resources that holds back productivity growth.
The other damaging factor to future growth that the IMF identifies is the ‘fragmentation’ of global trade and investment, as the major economic powers move towards protectionism, tariffs, bans on exports and business operations; and the imperialist powers led by the US seek to weaken and strangle those countries not ‘towing the line’, like Russia and China. The breaking-up of formerly globalised ‘free trade’ into competing blocs, the IMF reckons will reduce annual global growth by up to 0.7% pts.
What to do? After its dismal analysis of the future, the IMF proposes to solve the problems through more labour participation (women going to work) and more immigration (see my recent post), but mostly by the usual package of mainstream economic measures: “market competition, trade openness, financial access, and labor market flexibility” ie in other words, more free movement of capital (reduced regulation) and a reduction in labour rights (called ‘flexibility’). The IMF is really saying that the answer is to boost profitability by exploiting labour more and by allowing big capital to move freely across the globe. The IMF has proposed such measures nearly every year with little result.
As for AI, the IMF says: “the potential of AI to boost labor productivity is uncertain but potentially substantial as well, possibly adding up to 0.8 percentage points to global growth, depending on its adoption and impact on the workforce.” Depending on a lot then.
Real GDP growth forecasts do not reveal what is happening to the inequality of incomes and wealth within the average aggregate. But in its new ‘inclusive economics’ mood, the IMF comments: “the medium-term growth slowdown could affect global income inequality and convergence between countries. A slower growth environment makes it challenging for poorer countries to catch up with those that are richer. Slower GDP growth can also lead to higher inequality, reducing average welfare.” Indeed.
Will inequality widen or narrow in the rest of this decade? The IMF answers: “Depending on the measure analyzed, there is either no or only a modest expected recoupment in the medium term. Small within-country inequality improvements are not sufficient to offset the expected slowdown in between-country inequality convergence.” So the IMF concludes: “The growth slowdown has grim implications for the distribution of income between countries, of global income, or of a more general welfare measure.” It reckons that AI will make inequality worse and “inasmuch as other factors, such as geoeconomic fragmentation, worsen the distribution of income between countries, they will likely worsen global inequality and the distribution of welfare, unless they significantly improve income distribution within countries and other dimensions of welfare, such as life expectancy.”
At the beginning of this decade, just after the pandemic slump hit the world, there was optimistic talk of a repeat of the Roaring Twenties of the 20th century that the US economy supposedly experienced following the Spanish flu epidemic of 1918-19. That designation of the 1920s was always an exaggeration, even in the US; while in Europe there was a serious depression. And the roaring twenties gave way to the Great Depression of the 1930s. But now there is no longer any optimistic talk of a long boom, even if incorporating some possible productivity boost from AI. Now the talk is of the Tepid Twenties – at best.