Wednesday, September 3, 2008

Book Review: The Elephant & the Dragon by Robin Meredith

Book Review: The Elephant & the Dragon by Robin Meredith
Filed under: General
Posted by: site admin @ 9:18 am

S.V. Char

The Elephant and the Dragon: The Rise of India and China and What it Means for All of Us
by Robyn Meredith (ISBN 978-0-393-06236-6), W.W. Norton & Company, New York.

It may not be amazing that books and reports on China, India and their influence on geopolitics and their bearing on global economy are multiplying like rabbits. But what is indeed astounding, is the virtual consensus that the two nations together and even individually are bringing about “tectonic” changes and competition from them may pose a threat to America. This not-so-cool an inference about an apparent threat encourages authors, including Robyn Meredith to call upon USA to reinvent itself and perk up its gung ho unbeatable spirit. This reasoning is based on the assumption that deep into the future, the two countries would be able to maintain their relatively rapid growth rates. New evidence (about resource constraints) that is emerging should make everyone circumspect about the sustainability of continued high growth rates.

Global Perspective
One of the several merits of this book is Robyn Meredith tells this remarkable story of the economic emergence of two developing countries accounting together for a third of the world’s population with a truly global perspective, and with a modicum of objectivity, and with a critical eye to detail. For a student or observer of societal transformation, Meredith’s book makes an attention-grabbing account. She threads the India-China story interestingly,with every next chapter alternating from China to India and back to China. After the introductory essay in which some fear is expressed about the ‘potential impact’ of China-India economies almost like a come-uppance of economic history of the two countries, comes Chapter one “Where Mao Meets the Middle Class” followed by Chapter two about India’s transformation “From the Spinning Wheel to the Fiber-Optic Wire.” This is followed up by Chapter Three “Made by America in China” and by Chapter Four on “The Internet’s Spice Route.” This threading of the China-India stories continues in Chapters 5, 6 and 7, and thereafter, the stories blend in 8 and 9, the last two chapters.

Meredith connects her story with the contemporary unraveling of the industrial revolution of our times. She chooses to describe the changes as ‘tectonic.’ It is not difficult to appreciate why she thinks so.

Demonstration Effect
The author is captivated by the speed of the transformation of two hide-bound economies that wallowed in poverty and colonialism for centuries. She narrates unwearyingly the political backgrounds of the two economies: India believing in Gandhian values and peaceful ways, and the other putting faith in Mao’s authoritarian absolutism. Such a totalitarian system perhaps makes it possible for China to notch up higher rates of growth, at times even a blistering 15% rate in GDP growth. Adhering to a democratic system, India’s reports relatively slower rates of growth, with its economy plodding along at 8 to 9 %. And also make a note of the fact that China has much less diversity than India, whether in terms of languages, cultures, races, religion or what have you. And yet, the casual observer ignores these material differences, and judges strictly by the rates of growth.

What kind of a demonstration effect would the pattern of political organization of India and China have on the rest of the developing world? Would other developing countries prefer a more regimented China-like system with a faster rate of GDP growth or a more democratic Indian system with a slower GDP growth? Of course, we now know better, that if India had more of a free market oriented and less of a permit-license raj, she could boast of equally fast, if not faster, growth rates. If India had paid more attention to roads, electricity supply and other essential infrastructure, it would have matched her growth rates with China’s. Meredith makes a contribution to this discussion. She asks if the Chinese would trade their economic progress for more freedom, and whether Indians would trade their freedom for more economic progress. For both questions her answer is negative. On page 156 she discusses the ‘Singapore excuse’ that is used by China to justify authoritarianism. Having said this, it is sad however, that Meredith misses a great opportunity to go for a more serious discussion of the edifying effect the two models would have on other developing countries.

American Competitiveness
Consumers benefit the most from trade with China. Wal-Mart has set a China price benchmark and so American business is closing down high-cost American factories and outsourcing their merchandize to China. Very appropriately, Meredith brings in factors that aggravate cost disadvantages between America and China such as health care costs. According to her, first, it is better for America to concentrate on its core strengths such as ample resources, a highly educated and trained work force, and technological superpower status and further strengthen innovative capabilities. She advocates that America would need to ‘return to the basics’ such as education. There needs to be ‘dramatically improved education, starting with elementary school.’ While US universities are still considered best in the world, ‘American fifteen-year-olds are tied for twenty-first place in average academic performance globally.” College education is becoming less affordable.

Yet another factor that needs to be attended is wasteful consumer and corporate spending, the top executives being compensated by hundreds of millions of dollars even when their corporations are sliding into the red. Third, America’s infrastructure is in need of urgent repairs to avoid disasters such as the Katrina smash up of New Orleans. Internet connectivity is better in parts of India and China than in America. The book under review highlights the suggestion of the Council on Competitiveness demanding that there needs to be more basic research and US should spend at least one percent of its GDP on basic research and not just on product development.

Is Current Progress Sustainable?
The book calls for a change in mental attitudes in American working force such that instead of whining about loss of jobs due to outsourcing, they should retrain themselves for the next higher jobs. All cannot do so and will definitely become less competitive and would need their own, as well government safety nets. Also America needs to anticipate which jobs could be off-shored or Bangalored. Meredith quotes Nandan Nilekani, Infosys CEO: “If someone is cardiac surgeon, they are not going to be replaced. But if they are a radiologist, somebody from Bangalore is liable to check X-rays over a wire.” Hence the overwhelming need to focus on education. More significantly, she emphasizes his view that investment in education for the future of jobs in America is an imperative, and that is ‘nonnegotiable.’ And “the capacity of the US to constantly reinvent itself is extraordinary.” Meredith has great faith in America’s ‘can-do’ spirit. She sweet-talks America to believe that the rise of China and India would serve as a catalyst to restore America’s competitive outlook in issues of this kind especially when developing countries themselves can be so globally minded.

There are references in the book to broader questions of pollution, resource scarcity and related questions. However, it is perhaps beyond the scope of the book to discuss the sustainability of India’s or China’s economic rapid growth in the coming years. Willy-nilly, that is the issue engaging the attention of China and India observers because such scarcity could rein in growth.

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