Part I of the article can be found here 

Governance is all about having the right sense of priorities (using common sense which increasingly seems to be uncommon in Governments) for the benefit of the maximum number of people (and for the most vulnerable people first) than for the benefit of the capitalists alone. I don’t know, but I get the sense that from sometime in mid-1980s; when capital movement across countries eased; Governments started losing its priorities from main streets to the Wall Streets. It could have happened through a combination of (1) global capitalists threatening a well-meaning Government about the consequences if they collectively black-list the nation and/or (2) by hijacking policies of the Government by having members in Government directly representing the interests of the capitalists (at the cost of the citizens).

[Many from the developing world viewed the World Bank and the IMF as representatives of the (2) category as their countries got affected by the wrong policies of these institutes; now part of the developed world have also started viewing these Institutes through same lenses.]

The same movement of capital which once caused havoc with many of the developing countries has now started affecting much of the developed nations (in Europe as we witness now) as well. For the poorer nations, it was movement of capital (along with misplaced priorities); for the developed ones, it was more so in misplaced priorities (otherwise articles like ‘You’re Welcome, Wall Street’ is inexplicable).

What if, what if, if free flow of capital across the world can be implemented but not capital movements in speculative areas that looks like weapons of mass destructions? The capitalists have no national affinities, they can choose amongst nations that offer them the best returns even if that goes against the interests of the main street of those nations in the long run. Markets across the world have united the capitalists; it has not united the nations (or their Governments). There is competition amongst nations in attracting capital, however there isn’t same levels of competition amongst capitalists in investing in socially sustainable projects. Within a single nation, there exists a next level of competition among states in offering subsidies (or benefits, whatever) to the incumbent business house to attract that investment. Needless to say that tax-payers bear that burden that nations or states shower on the capitalists in attracting investments through forms of state-subsidies. The often-repeated logic offered by Governments in doing so is to improve the lives of the local people with the help of the trickle-down effect. We will look at effectiveness of trickle-down effect little later. Instances where this argument of the Government have been found to be true, one need to ask the question at whose costs that prosperity has emerged. One can look at the example of Singur in India to find similar such instances of direct or indirect investments.

The capitalists never had it so good in the past. A perfect global competition to attract their investments and lots of opportunities to invest, resulting in not much of a competition amongst capitalists themselves in offering higher incentives to the state (while bidding for the same project).

On the other hand, capital can’t remain idle for years. They need to be invested in some nations in some forms. What if, what if, if all the nations can collectively join hands in declaring that interests of our main streets (vulnerable sections) come before that of the Wall Streets. What if nations start following uniform policies (in not subsidizing businesses with tax-payers’ money and by having uniform tax-rates that help business and innovations to sustain) so that capitalists can’t make one nation fight with the other in order to attract their capital, where ultimately citizens of both nations happen to be the losers.

[Capitalists have tried dividing nations on forms of Governance like Communist country, etc. However if we recollect Plato, we understand the poors of America may share their mental maps more with the poors of China and that of India and vice-versa. ‘Any ordinary city is in fact two cities, one the city of poor, the other of the rich, each at war with the other; and in either division there are smaller ones – you would make a great mistake if you treated them as single states’ (The Story of Philosophy, Will Durant on Plato (‘The political problem’ section)) pp20]. Surprisingly we find that the cities of the poor and the cities of the rich are fundamentally same across the cities of the different nations in the 21st century world.

The priority of any Government anywhere is first to provide basic amenities to the most vulnerable sections of its people. I see the role of a Government to be like a father-figure supporting, as best as he can, his adult offspring in order of the priority of their vulnerabilities (where all the grown-up offspring actually happen to be on their own, managing themselves as per their abilities, as with the citizens of different nations).

Standards of basic amenities across the world vary. In the U.S., it may be jobs; for Indian tribal-people it may be food, water, electricity, roads, education. The U.S. has failed in doing so over the last couple of years in spite of adding trillions of dollars of Government liabilities in saving the Wall Street. Indian Government has failed for more than sixty years in providing basic amenities to much of its rural areas, more so in tribal-populated ones. With the information age, the unemployed in the U.S. or the tribal-section in India are respectively aware of the trillions of dollars of aid to the Wall Street by the U.S. Government in various forms or about the favorable mining leases Government allowed private sectors to have in tribal India at the cost of the poor tribals. These so called vulnerable sections may economically be vulnerable, but no longer are vulnerables in terms of having the right information affecting their lot.

Information, unfortunately for the Governments and fortunately for the people, has no longer been the monopoly of the Governments of the nations. Increasingly, these underprivileged section of the people are aware of the lifestyles and the obscene amount of richness the capitalists have been having at the costs of their sufferings; and they constantly compare both. It is natural in human psychology and behavior. In such a comparison, the benefits that the vulnerable sections received from respective Governments over last few decades may often tend to be ignored even if that gain in recent past outweighs similar gains from the periods prior to the recent past. The credit goes less to quality of Governance and more on technical advancements. We rarely compare our present life-styles with that of our past; we rather do that with that of our better-off neighbors. The improvement in real incomes or in life-style of these underprivileged people in the recent past in no way is comparable to that of the richer sections of the society.

And there lies the key problem of present forms of Governance. Income divides have been allowed to grow across nations without the sense of urgency that nations must collectively now show to tackle it. No nation can take that fight single-handedly due to the threat the capital movement (flight) across nations poses. But nations together can surely make policies to collectively change the dangerous trend of income divides that has lately been witnessed. The time is probably right to have uniform policies to tackle financial terrorists across nations as it has been for the other brand of terrorists. Earlier terrorists were often wrongly regarded to be freedom fighters (or fighter for a rightful cause) that one nation could exploit against its enemy nation; thankfully it is no longer so. The same principle needs to be applied with capitalists by having uniform policies for them across nations than safeguarding/welcoming them in one nation when another nation bears the costs of their terrorist-like actions. Sooner or later the nation harboring freewheeling capitalism is likely to pay the same price that nations that harbored terrorists have now been paying.   

Expecting trickle-down effect to take care of the majority of the nearly 6.7 billion people across the world through the actions of a few billionaires and millionaires are like expecting horse and sparrow theory,” of Galbraith to be effective (“if you feed the horse enough oats, some will pass through to the road for the sparrows”). In the human context of 21st century, the horses are too few, the sparrows are too many and the horses here accumulate than only feed. Moreover the sparrows know what the horses feed on and what they leave behind for the sparrows, and that further drive the mistrust in Governments.

So we have a scenario where information has empowered the citizens whereas Governments across nations, the so-called most powerful institutes of any nation, seem to have surrendered before the demands of a common breed of global capitalists. Don’t brand me a communist; the capitalists have somehow, somewhere hijacked the policies of most of our Governments. We don’t know exactly how it happened, but a look at policies across nations that help the rich grow richer and the poor struggle further for existence validate it.

Otherwise how does Wall Street (or any society within a democratic Government) justify salary of CEOs at hundreds of times more than that of a rank and file employee in same organization (when Drucker, thinker for the same Wall Street, felt it should be no more than 20-times)?

China was out of our scope as it may have managed that flow of information that empowers the citizens with knowledge; however time may be right to look for alternatives to ‘Washington consensus’ policies if our Governments want to regain the trust of their citizens. That includes the U.S. too, if the U.S. wants to be true to its main street.

Can Obama really free the U.S. Government from the clutches of the Wall Street in this information age as the printing press helped the society to free itself from the clutches of the Church in the sixteenth century? The printing press subsequently lead to the reforms in the Churches; we are yet to see any such significant reforms arising in this information age – be it in the Wall street or more so be it in our forms of Governance.

Going by history, those reforms may not be far off. Victory of Obama against all odds portends that demand from the citizens. In present forms of Governance, citizens can’t change the way Governments work; they rather can only change the Governments (surprisingly, most Governments now increasingly look the same). With the printing press, the real impact on Churches started after nearly fifty years of arrival of the printing press. While expecting a repeat of the sixteenth century in the 21st century (due to the pervasive nature of present information revolution), it’s likely to be sooner than later .

The author is a Professor at IIFT, Kolkata. He can be followed at Twitter @ http://twitter.com/RanjiGoswami

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