TIME TO START THINKING: America in the Age of Descent
Edward Luce
Hachette India
Pp 291, Rs 699
In early 21st century USA and India occupy such an opposite end of the development scale that it comes as a ginormous shock when the parallels become obvious.
USA has been through a century and a half of amazing pace of growth, India has grown at the same pace for a little more than twenty years. But what grips attention in Edward Luce?s disturbing book on USA, Time to Start Thinking: America in the Age of Descent, is the destructive potential of specious policies on a country. That the country happens to be a $14 trillion GDP economy which accounts for a large part of what happens to the rest of the world makes it a page one read.
Still, no book on USA might be able to provide a single narrative of how this nation began losing its orbital velocity. Some like Thomas Friedman believes that USA could get a second wind if its political system comes together, which allied with a rising population, the third largest after China and India may steer it out of the present mess. Luce is less sure of this happy ending. What strikes out as the most telling essay is an exploration of the permanent referendum system California introduced in the early 1900s. Initially designed as an antidote to corporate influence over the ballot box the search for easy solutions has instead put the state onto the highway of terminal decline. Voters regularly okay contradictory measures, the most popular being to cut taxes but raise public service. ?Unlike (elections) the referendum requires thought. Usually whatever thought voters can spare is last minute and highly volatile. Public opinion often swings 20 to 30% in the week leading up to the vote?, the author notes.
It all started as trust in politicians and public institutions declined. But the result as Luce warns is the permanent veto of the minority that feeds off the progressively less interested majority. The latter is always bored and looking for ways to blame someone, usually the government in Washington DC. The minority, boosted by the Internet holds the nation hostage.
In eerily familiar ways India too seems to have arrived at this point rather early on its development curve. The spurious set of solutions to all the economic themes ranging from land acquisition to environment makes the parallels evident.
But this shouldn?t be happening. Luce knows India quite well having worked in New Delhi for Financial Times for five years since 2001. And he peppers the chapters with a liberal sprinkling of Indians like Amar Goel, a Harvard graduate who has returned to India battling sceptics in his class who still want to pursue the American dream. There are plenty more like Goel who have begun to believe in the Indian dream as Luce notes.
The headache India is creating is by not taking up these opportunities. For more than a century, as he notes, America has been the world?s biggest magnet for people of talent. These were the people who drove the growth of that continent-sized economy. The magnet has now shifted eastwards. America has begun fighting its immigrants and Luce?s story is mostly about how that fight is squeezing out the USA making it less and less likely to succeed in the challenges of new sciences thrown up by this century.
It is not clear if India is in that east. The rush to create safety nets, block failures and the antipathy against new offers is bringing down the economy independent of what is happening in the rest of the world. In eight years since 2004 the only economic opportunity Indian Parliament has opened up is the India-US civil nuclear deal. Every other major legislation cleared in this period is meant to block an initiative in some sector. The right to education for instance transforms a government responsibility to an obstacle course for setting up schools.
Luce has a terrific advantage that he does not have to fight for or against any partisan sympathy in Washington as he makes his case. As a foreigner he can examine dispassionately how the gridlocked politics of the city is making the options for the country narrow.
Of all the chapters in the book, Maybe We Can?t, a take-off on Barack Obama?s We Can is fantastic. As Luce travels metaphorically through DC, the great game of the world?s most powerful nation comes illuminated. He begins it with the party thrown by the Podesta couple, the city?s most well-known lobbying group just a shout away from Denver where Obama gets his nomination from his Democratic Party to run for the Presidency, you realise who won. The Obama ticket was built on battling cynicism and lobbying.
?Obama?s White House gives off just as strong an aura of money as its predecessors?. This was just what the President had promised not to have in his term. Within days of his swearing in the lobbyists were back and the amount spent on official lobbying rose by almost a fifth to $3.5 billion in 2009 and again in 2010. Lobbying is the third largest industry in America?s capital after government and tourism, Luce notes. Wall Street for instance spent more than $1 billion in the 18 months of the passage of the Frank Dodd Act that was USA?s response to the meltdown of 2008. What the Street spent added up to more than $2 million apiece for each of the 535 members of the Congress. The result, as Luce notes, is the missing political will to make sure problems like the financial bubble were addressed.
He quotes Raghuram Rajan to say ?It is a problem of modern complex economies that the only people who understand its most important parts are often captured by them?. Evaluating the role played by treasury secretary Timothy Geithner, analysts, including Rajan, viewed him as an example of cognitive capture by Wall Street. Unlike Hank Paulson, whom Geithner succeeded to the post, who came from institutions like Goldman Sachs, which needed to ensure that reforms went slow, Luce says the allegations against the treasury secretary ? will largely depend on what job (he) decides to take when he quits?.
The Obama administration, Luce argues, was voted in to make this financial difference count for nothing as America got used to doing business in a different way. When it didn?t happen, the cynicism among the electorate mounted. A person Luce interviews says, ?The more alienated America?s voters become?the more positively they will respond to whackos who emerge from nowhere to exploit their resentment against Washington?One day one of them would win?. Sounds too close to home for comfort, though.