ARC's 1st Law: As a "progressive" online discussion grows longer, the probability of a nefarious reference to Karl Rove approaches one

Friday, June 03, 2005

Nail: Meet Hammer. Friedman on EU & Globalization

Great article by Tom Friedman in the NYTimes on globalization, the non vote on the EU constitution by France & the Netherlands, and why India truly will be a powerhouse in the future. It's a good thing the Bush administration has recognized that and announced as much recently.

A Race to the Top
Published: June 3, 2005

Bangalore, India

It was extremely revealing traveling from Europe to India as French voters (and now Dutch ones) were rejecting the E.U. constitution - in one giant snub to President Jacques Chirac, European integration, immigration, Turkish membership in the E.U. and all the forces of globalization eating away at Europe's welfare states. It is interesting because French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day. Good luck.

Voters in "old Europe" - France, Germany, the Netherlands and Italy - seem to be saying to their leaders: stop the world, we want to get off; while voters in India have been telling their leaders: stop the world and build us a stepstool, we want to get on. I feel sorry for Western European blue collar workers. A world of benefits they have known for 50 years is coming apart, and their governments don't seem to have a strategy for coping.

One reason French voters turned down the E.U. constitution was rampant fears of "Polish plumbers." Rumors that low-cost immigrant plumbers from Poland were taking over the French plumbing trade became a rallying symbol for anti-E.U. constitution forces. A few weeks ago Franz M√ľntefering, chairman of Germany's Social Democratic Party, compared private equity firms - which buy up failing businesses, downsize them and then sell them - to a "swarm of locusts."

The fact that a top German politician has resorted to attacking capitalism to win votes tells you just how explosive the next decade in Western Europe could be, as some of these aging, inflexible economies - which have grown used to six-week vacations and unemployment insurance that is almost as good as having a job - become more intimately integrated with Eastern Europe, India and China in a flattening world.

To appreciate just how explosive, come to Bangalore, India, the outsourcing capital of the world. The dirty little secret is that India is taking work from Europe or America not simply because of low wages. It is also because Indians are ready to work harder and can do anything from answering your phone to designing your next airplane or car. They are not racing us to the bottom. They are racing us to the top.

Indeed, there is a huge famine breaking out all over India today, an incredible hunger. But it is not for food. It is a hunger for opportunity that has been pent up like volcanic lava under four decades of socialism, and it's now just bursting out with India's young generation.

"India is the oldest civilization, the largest democracy and the youngest population - almost 70 percent is below age 35 and almost 50 percent is 25 and under," said Shekhar Gupta, editor of The Indian Express. Next to India, Western Europe looks like an assisted-living facility with Turkish nurses.

Sure, a huge portion of India still lives in wretched slums or villages, but more and more of the young cohort are grasping for something better. A grass-roots movement is now spreading, demanding that English be taught in state schools - where 85 percent of children go - beginning in first grade, not fourth grade. "What's new is where this movement is coming from," said the Indian commentator Krishna Prasad. "It's coming from the farmers and the Dalits, the lowest groups in society." Even the poor have been to the cities enough to know that English is now the key to a tech-sector job, and they want their kids to have those opportunities.

The Indian state of West Bengal has the oldest elected Communist government left in the world today. Some global technology firms recently were looking at outsourcing there, but told the Communists they could not do so because of the possibility of worker strikes that might disrupt the business processes of the companies they work for. No problem. The Communist government declared information technology work an "essential service," making it illegal for those workers to strike. Have a nice day.

"This is not about wages at all - the whole wage differential thing is going to reduce very quickly," said Rajesh Rao, who heads the innovative Indian game company, Dhruva. It is about people who have been starving "finally seeing the ability to realize their dreams." Both Infosys and Wipro, India's leading technology firms, received more than one million applications last year for a little more than 10,000 job openings.

Yes, this is a bad time for France and friends to lose their appetite for hard work - just when India, China and Poland are rediscovering theirs.

Paul Krugman is on vacation.
[It seems that Pauly has lost his appetite for hard work as well... course, who am I to criticize as I'm on vacation, too... Although, I did work work today and am doing school work this evening. I wonder what Paul is doing???]

I predict that if "Old Europe" (which appears to have been an appropriate description) doesn't reform its social welfare policies in the next elections (in Germany & France primarily), the convulsions of the european economic collapse on the continent (not the UK, for now) will be quite devastating. It could be a hard leftward turn or a hard rightward turn, but make no mistake - It's unlikely that it will be towards market liberalization (Downer - that means free markets, not the progressive/leftist/statist thoughts running through your head). The citizens in those countries will seek out any leader that will promise to protect them from the Polish plumber and keep their cushy welfare benefits in place - regardless of the effects.

With regard to India, it's great to see that the poor now realize the ticket to economic prosperity is education. One wonders whether the breakdown in the caste system in India will be an evolutionary process or whether there will be a backlash. Given that there are already more applicants than jobs available (due to idiocy here in the US and abroad that outsourcing/free-markets are bad), this could prove troublesome. I say let's send them some more jobs and focus our talents on what we do best. So, marketing, finance, and high-technology. If you've got a student getting ready to head to college to study philosphy or Greek mythology, watch out. Take the money and invest it elsewhere and the kid will be better off financially. That is, unless you can steer them to a degree that will have some economic benefit in the new, global economy.

Your Co-Conspirator,
ARC: St Wendeler