During the last two years of economic upheaval, there has been a curious reversal in the display and articulation of public anger in the US and India—the world’s oldest and largest democracies.
People in the US have directed their anger and frustration at growing unemployment and overall economic malaise by targeting incumbent politicians and the government, while in India, normally susceptible to anti-state rhetoric, the frustrations, despite over a year of double-digit inflation, remained largely muted.
Recent opinion polls in the US show that nearly six in 10 voters, angered by the unprecedented economic downturn, have indicated that they would cast out the incumbent in the mid-term polls due in November. Recent economic news from the US suggest that the economy is not getting any better with unemployment rate but marginally below 10%, factory orders in May at the lowest in the last one year, home sales continuing to struggle and auto sales declining in June.
The voter discontent is supposed to be the worst in nearly two decades and seems to be directed significantly at politicians and the government. The Democrats under the leadership of Barack Obama, whose popularity ratings, too, are dipping, are obviously worried. The only comfort is that incumbent Republican legislators, too, are in a flap.
In contrast, the persistence of rampant double-digit inflation in India for most of the last two years is hardly stoking the kind of anger that one has been led to expect from experience (the spurt in onion prices alone had led to the toppling of the Bharatiya Janata Party in Delhi in 1998). In fact, food inflation scaled a 11-year high of 19.05% in November last year, and more significantly, has dropped, but marginally, to around 15% since. (Capital Calculus had in fact flagged the phenomena in “The baffling silence of the masses” on 13 December.)
This reversal in the calculus of anger may have to do with the ideological shift that has been under way in the two countries. Conventionally, the economic ideology in the US has been dominated by market-based systems, while in India the role of the state has been pre-eminent. But all this has begun to change.
In the case of the US, the onset of the global economic meltdown triggered a revival of Keynesian inspired state intervention. Playing on this in his campaign and subsequently after he was elected the US President, Obama has rapidly expanded the role of the government, to what many free market believers argue is uncomfortable.
The government in the US has assumed a responsibility quite unlike witnessed outside a war-like situation. The soul searching questions on the efficacy and the power of the markets has only sharpened this perception. So it is not surprising really that the people at large hold the government and its associated machinery responsible for their woes.
On the other hand, in India, over the last three decades, progressively, the role of the state has diminished. It first began as searching questions in the 1970s about the notion of the socialist ideology in delivering desired levels of economic development; the oil shock and subsequent economic crisis took this debate to another level altogether and eventually laid the foundations of what is now popularly described as liberalization of the Indian economy. The ideological fallout, especially in recent times, has been a more prominent role for market forces and, consequently, private enterprises.
Combined with the rapid changes in technology and lower prices, a lot of the so-called material aspects of the new growth process, such as cellphones, easy entry-level jobs and other consumer durables, have become more accessible to include even the not so well off. Alongside, there is visible upward mobility among the lowest income strata. It won’t be surprising, therefore, to assume that this has stoked aspirations and belief in the new growth process inspired by a shift to a market-based regime.
More importantly, the government is not seen as the only source; bulk of the phone services are provided by private service providers; similarly in transport and so on. What it adds up to is the fact that the perception of the power of the state has also diminished. So when things don’t work out, the responsibilities are diffused and it is difficult to view the government as the proverbial pinata.
Also, with government intervention providing some sort of social safety nets (such as the Mahatma Gandhi National Rural Employment Guarantee Scheme) to the rural populace in general, economic pain is relatively more bearable.
So what we have is an interesting role reversal in two democracies that are economically at two ends of a pole—the US economy is around $14 trillion, while India’s is estimated at $1.2 trillion. It may be tempting, seeing no apparent articulation of public anger, to conclude that in India, unlike the US, things are doing fine. It would be a huge mistake.
Fortunately, the political leadership of the Congress, whatever their motivation, with its emphasis on entitlements such as those for rural employment and the proposed one for food, are creating alternatives to deal with what is otherwise a failure of economic policy to manage inflation.
Here again, this would be a stop gap. Not only is it impossible to perennially fund such entitlements, there is only so much cushion such social safety nets can provide.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics.
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