Monday, December 17, 2012

WHY INDIA NEEDS TO PREPARE FOR THE DECLINE OF THE WEST

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From: Vaidyanathan R
Date: Mon, Dec 17, 2012 at 3:33 PM
Subject: WHY INDIA NEEDS TO PREPARE FOR THE DECLINE OF THE WEST
To: Vaidyanathan R

http://prof-vaidyanathan.com/2012/12/15/why-india-needs-to-prepare-for-the-decline-of-the-west/

 

WHY INDIA NEEDS TO PREPARE FOR THE DECLINE OF THE WEST

 

December 15, 2012 · by  Prof.  R. Vaidyanathan · in First Post

 

Two reports released this week in the US will have significant and far-reaching implications for countries like India. These reports are: Global Trends 2030: Alternative Worlds, by the US National Intelligence Council, and US Strategy for a Post-Western World: Envisioning 2030, by the Atlantic Council.

These reports should be read and digested by countries like India as we need to prepare strategies to deal with the post-Anglo-Saxon era. The reports are available.

Firstpost is no stranger to these ideas. In an earlier article, Decline of the West, we had expected the decline to accelerate in the coming years. The decline stems not only from the shift in economic power, as the above two reports suggest, but from a fall in societal values.

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People are comforted near Sandy Hook Elementary School on Friday after a man killed 26 people, including 20 children. AP

Friday’s massacre of school children in Connecticut is yet another indicator of the loss of sovereignty of the family. The gunman could have come from a dysfunctional family system and gun culture is destroying the US social fabric.

In the earlier article, we had recalled the pioneering study of Angus Maddison for the OECD, in which he demonstrated that till 1820 India and China had nearly 50 percent of the global GDP before their decline started. From that point of view, we are “re-emerging markets” and not emerging markets. Nearly 200 years of western dominance are coming to a close, and, as predicted by Sri Aurobindo, “India will rise from the ruins of the western civilisation.”

The above mentioned two reports tell us something we always hesitate to believe till someone from the west confirms it for us. The reports indicate how China and India will be more powerful than the US by 2030. One of the reports also suggests that Asian cultures will supersede America’s and Europe’s in 20 years as the global middle class grows. But it also predicts that competition for resources, including food, space and water, will be fierce.

Five trends which will have far-reaching implications for the west and us are the following:

*The west’s problems are related to the decline of the family as an institution and household savings.

*Demography is increasing the proportion of old people in the population.

*Rising longevity is leading to a social security crisis which will bankrupt governments.

*The decline of the church and belief systems – both in Europe and US – could have major implications

*The Westphalia consensus about the sovereignty of nations which are not western/white is over.

These trends have not been adequately dealt with in the main reports possibly because they are focused more on economics, energy, etc. But the building blocks of any civilization start with the family, and this has gone for a six in the western world without alternate institutions emerging.

During the early nineties, more than 50 percent of global GDP, adjusted for purchasing power parity, was with the G7 countries (predominantly white/western), with the major emerging markets like India and China accounting for 36 percent. But this has already reversed. It is expected that the original G7 countries will have less than 30 percent of global GDP by 2020. Also, the forecast for growth rates in the coming years is either negative or a very low number.

The unemployment rate in many European countries like Spain and Greece is more than 20 percent and among youth (aged 16 to 24 years) it is nearing 50 percent. Europe had nearly 25 percent of the world population during World War I and now it is around 11 percent and expected to be 3-4 percent in another 20 years.

Britain has fallen out of love with marriage. The 2011 Census shows that the number of married people has fallen to 20.4 million, nearly 200,000 less than a decade ago. A quarter of the people in England and Wales are single, while the number of those cohabiting has risen from 9.8 percent of the population to 11.9 percent. Growing numbers of people are also choosing to divorce.

The breaking up of the family has put tremendous pressure on the state to sustain single parent/single women families and also the elderly. This has put their social security schemes – if at all funded – under strain.

Europe has become secular, which is a euphemism for renouncing or ignoring the church. For instance, the recent census in the UK has revealed that there has been a decline of 12 percent in people belonging to Christianity and 25 percent of the population said they had no faith – an increase from 15 percent a decade earlier.

The UK is also exhibiting tendencies in societal behavior more typical of third world countries. For instance, urinating in the streets is becoming a major issue and the town of Chester is using innovative ways to punish offenders like asking them to maintain local heritage sites.

The French are grappling with the issues of illegitimacy and failure of the family system. An ex-French law minster had simultaneous relationships with eight men and it is becoming difficult to ascertain who is the father of her kid. In another decade, many French kids may be able to identify their fathers only through DNA tests.

The USA is facing similar issues.  In 2010, more than 50 percent of children were born out of wedlock and illegitimacy is the new norm. Among blacks, it is 75 percent and among Latinos more than 55 percent.

The US faces an unprecedented crisis since families have been nationalized and businesses privatized. Society has become dysfunctional. This year, more than half the births are of non- white children, giving rise to the possibility of the US becoming a non-white majority country in another 30 years when Spanish and Chinese could become major languages. This could have a tremendous impact among Mid-West and Southern Bible-thumpers like Rush Limbaugh. This could give rise to sharper social conflicts and open up the old civil war fault lines.

According to a report in The Wall Street Journal last year (10 October 2011), nearly half of US households received some form of government benefits like food stamps, subsidized housing, cash welfare or Medicare or Medicaid (the federal-state healthcare programme for the poor) or social security. The US is also a stock market economy where half the households have investments, and recent bank and corporate failures have hit them hard.

Under the circumstances India needs to strategize for the future.

We should recognize that for most of the Indian elite, their umbilical cords are linked to the west. Many of them are/were educated in the US or Europe, and most of them have their children studying or working there. Due to colonial genes, acceptance/recognition by the west is critical for average middle class Indians.

The danger is that we are going to buy their failed models when they are in decline. They will try to sell us everything they have, and we will buy because of our colonial genes. They will hire more Indians to head global companies as showpieces in order to penetrate our markets.

The reality, that the west is in decline and many of its institutions are failing, has still not struck us and we will continue to try and imitate them – including dysfunctional family systems. We should recognize that we are a civilization and not just a market. Today funds are in search of markets and not the other way round. Instead of heading global institutions, we should acquire them.

Civilisationally, we are nearer to the East than the West. We should take the lead along with others in the East to create alternative institutions to the World Bank, the IMF and the UN. The need is to recognize that the old debate about big business or big government is passé. Our ability to look beyond Marx and market into our thriving communities and bazaars will provide us answers to many issues.

Will India, as Aurobindo mentioned, rise from the ruins of the West?

 

 

_______________________________________

R.VAIDYANATHAN                                                         

PROFESSOR OF FINANCE                                             

INDIAN INSTITUTE OF MANAGEMENT  

BANNERGHATTA ROAD

BANGALORE

INDIA_560076

 


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