Glance of Globalization in India - II

(After 20 years of its implementation)

Globalization or Centralization?

We have read in detail how the globalization and liberalizations been introduced in India and it’s impact. That was part of 90s and now let us analyze it’s impact in 2000’s first decade.

During the Second World War, America kept itself away from participating, but, it sold very huge volume of weapons to most of the countries involved in the war and in return collected gold from them. After the war, in trade America imported goods from other countries and gave them dollars and treasury notes (a form of receipt to ascertain that we have imported this much amount of goods so and so country) in return.

We all read that in any country the reserve bank of that country prints the notes equals against its gold reserve. It is because in case, someone returns the currency then the reserve bank of that country should be able to return the equal amount of gold to the country. But, America printed more currency thinking that who will know it? But, after few years of World War II, when countries started surrendering their treasury notes to America one after the other and asking to give gold back then American government thought that, their secret of printing more notes might be revealed and even they would lose their gold reserve and their dollar would become tissue paper. After realizing this one fine day, American government gave a press statement that ‘no country would ask any more gold from America, everyone should believe that America has gold reserve”. What is this?

American Consumption

You know, in the world America is the highest importing country. It imports highest percent of goods from other countries in the world market. China and India are the 2 major exporters of goods to America. It is all in the name of Globalization and Liberalization. America does space research, nuclear weapons, etcetera but, not ready to produce daily use products like broom stick, buckets, bed sheets, bulbs, etc... All these being imported from China and eastern countries and in return they get treasury notes.

This is happening because the fundamental assumption in the world is that American dollar has some value. If American economy falls tomorrow then there is a chance that even Chinese economy collapse along with it. It is because, on one side the China’s trade reserve is going up other side the American debt is going high. Then when one falls, other will also fall. 

East Asian countries like India, China, and Japan... are savings economies, that is why they have capital, whereas America is a spending economy. America spends $ 107 for $100 earning. Due to the reckless spending, America had 5 trillion dollars of debt in 2006. Now, it might have crossed 11 trillion dollar. But, in the same year the Federal Reserve Bank of America announced that now on they are not going to disclose how much dollar is floating in the world. What does it mean? It means a financial institution is denying disclosing its balance sheet.

The main reason for high consumption is nuclear family system; there are more live-in relationships. In that case every house hold needs its own set of goods and home appliances, luxuries for a home. So, it will boost the consumption. 

Another thing is Americans' attitude. Say out 4 bananas served to an American, two turned little dark then he don’t eat them, he throw them. This is just a small example I gave here. This is called lavish living, which requires lot of money. That is why they do not have any savings concept. The national savings during 2006 was -7%. Then how the country would generate capital?

The answer to this is the third point why America spends more. That is they (American financial policy makers, economists, etc) want to hold control on world capital. That means no, other country or countries currency value should go high in value. That means unless they pay back, these countries will not have their own capital to invest. How big and well planned conspiracy this is.

Accumulation of Developing Country’s Capital

To borrow that money they have all this globalization and liberalization, which is nothing but, transforming the wealth from poor and developing countries to their. It is nothing but, capital or growth centralization. In the second phase, globalization moved from re-colonization to global financial centralization. That is why we look at America before taking any major decision. That is why we obey their instructions. It is nothing but political slavery.

The hard savings borrowed from these developing countries was given to the American financial institutions and in return those banks started giving that money as loan to their citizens, during last decade (2001 - 2010). Even the average earning person (like a taxi driver, butler, barbar) who cannot afford lavish home, automobiles, accessories and household items etc.. was also offered loans with less interest rate. Because, America had to spend to get control over world capital. For e.g.  for 5% first year, 3% second year, and 6% there on... American government or financial institutions were not worried about repayment initially, because, it is Indian money or money from developing countries. 

Here in India, if someone takes loan from us, we ask him to repay within agreed time bound otherwise, we take possible action against him. But, here nobody has guts to ask back the money paid to America.

When even the outside borrowing was insufficient, then American banks reduced interest rates several times in a very short span. Even then people could not repay as they did not have money. That is why major financial institutions and banks became bankrupt, we all know this. Then these banks had to reduce interest rates to get the money back from the loan holders. After reducing the interest rates, the power of attraction of that currency also comes down. People or foreign investors would start investing in other economies where they can get higher interest rates. That is when the recession hit America and India being completely dependent on USA, even India and other world economy got heat of this recession.

Save Dollar

But, still there are other ways though which constant demand for dollar is being created in the world. That is through Oil Exchanges. There are only 2 oil exchanges in the world one is New York oil exchange and the other one is London oil exchange. Where Arabs are paid in dollars by these exchanges on selling crude oil and the countries buying oil from these exchanges have to pay in dollars. The Arabs cannot sell us directly and get paid in our own currency. So, this is a constant and artificial demand created by USA. 

Once in Iraq, Saddam Hussein tried selling oil directly other denominations than dollar. We all know how Americans destroyed him and his country with no reason, but, by spreading rumor that Iraq has mass weapons of destruction. So, they are threaten to the world and we have to get control on these weapons. The similar trick they are trying to play now against Iran as well. Other than this even the commodity trade in Chicago happens in dollars. Even America has kept its arm forces in several countries of the world to save dollar though the dadagiri.

In these conditions, if some country or group of countries dare to sell the dollar visa vi the gold then immediately American dollar will collapse. However, America is not much bothered now to keep the value of dollar. It is countries like us who gave credit/loan to them or sell goods to them got treasury notes, have to worry to save the value of dollar. Otherwise, we as a nation or individual will be losers. 

It is something like a project. The project manager has brought money from bank and started a project then the manager has not to worry about the success of project, rather it is the bank, who paid him has to worry for the success of the project. 

So, the Save Dollar is the global mantra this globalization gave.  That is the condition in which this globalization left world. Neither we have capital nor do we have government’s effort to bring our loans back. 

What Globalization Gave Us?

Scams, scams, scams! The major scams started since the mid of 90s. The foreign companies getting into agreement for trade, mining, infrastructure, other extraction of natural resources, ores by paying huge bribes to the political leaders and bureaucrats. The race between states for attracting the investment started. India is on sale in parts. This is the gift of globalization.

We have to learn from USSR (Russia). One among the major reasons of its collapse was Globalization and Liberalization they adopted in their country. When Russia divided in to 13 countries, there used to be 2-3 km lines for a single loaf of bread and 1kg of wheat. We even have to learn from East Asian countries (like Malaysia) crisis.

What we have to do as a nation?

To overcome this situation there are two things we can do. One is disengage slowly from the global economy and second and important one is increase internal consumption. Let the export of goods continue as it is today, but, the dollar we get in exchange should be invested in India rather than giving it back to America. 

We should motivate internal savings and strengthen our industry and economy by internal capital. We rather not entirely depend on government, but, as an individual, stop obsession for dollar and simply BE INDIAN, BUY INDIAN! This mantra only will save us from this disaster in the long run. 

I am not telling here, that globalization and liberalization are not worthy instruments of growth patterns. What I am telling is, before introduction of any big change in the country, it should be allowed for a national discussion and should consider public interest and it should be re-tailored according to our national condition and should be flexible enough to change according to changing times. And there should be liberty to take our own decisions in our national interest Only then we can reap the best benefits of any big change.

--K. Kalyan

Do Visit : Part -I