The Hindu Notes - 23rd August 2018

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Tilting at windmills

Donald Trump’s trade war ignores the complexity of world supply chains and glosses over issues within U.S. industry

In U.S. President Donald Trump’s simplistic world-view, slapping tariffs on the U.S.’s main trading partners — Canada, China, the European Union, and Mexico — will reduce U.S. trade deficits, bring back well-paying manufacturing jobs, and make America great again. This has such populist appeal — some 73% of Republican voters support the tariffs according to a PEW Research Center poll in July — that pro-trade Republicans in Congress have largely been silent on the issue.

Trade with China

Since China, for instance, exported some $505 billion worth of goods to the U.S. last year but imported only $130 billion, Mr. Trump assumes that China could not match the escalation in tariffs since it has a weaker hand. In April, he tweeted, “When you are already $500 Billion DOWN, you can’t lose.”

This approach simply ignores the complexity of global supply chains. It also glosses over underlying problems with the U.S. industrial structure. These changes, rather than globalisation, are responsible for the stagnation of average U.S. wages in real terms for almost 40 years.

Non-Chinese owned companies account for almost 60% of Chinese exports to the U.S. Much of this consists of very specialised parts required by U.S. factories to make a variety of products ranging from out-board motors for boats to computer routers. Since these non-Chinese companies cannot easily relocate their operations to other countries, the net result is that the burden of the tariffs will be felt by consumers in the U.S. The Trump administration’s imposition of a 20% tax on washing machines in February led to its price going up in U.S. stores by 16.4%.

U.S. imports from China also include products which contain parts made in other countries. The Peterson Institute for International Economics estimates that 87% of computers and electronics, which constitute the largest share of Chinese exports to the U.S., includes parts and financing from other countries like South Korea, Japan, and the U.S. itself. So not only does this limit the negative impact on Chinese manufacturing practices, it also affects other countries. Even before Mr. Trump imposed a 10% tariff on $200 billion worth of Chinese goods in July, South Korea’s exports of cars and consumer electronics to China fell substantially.

According to Professor Mary Lovely of Syracuse University, U.S. merchandise exports from China account for only 3% of Chinese manufacturing revenue. And the impact of tariffs on a potential reduction of these exports is further diminished by a 7% fall in the value of the Chinese currency. Beijing also has more than $1 trillion in foreign currency reserves to cushion the brunt of a trade war with Washington.

The retaliatory tariffs China has imposed on U.S. products have also had a negative impact on German car producers in the U.S. where BMW has its largest factory in Spartanburg, South Carolina rather than in its home country. By raising duties on soybeans and pork, it has struck at Mr. Trump’s key constituencies of support in the U.S. midwest. Beijing’s tariffs even hit Kentucky bourbon to increase pressure on the Senate majority leader Mitch McConnell who represents that State.

Similarly, the 25% tariff imposed on Mexican steel exports to the U.S. has had no impact on the Mexican automobile industry. The northern Mexican city of Matamoros produces 90% of all steering wheels used in U.S. vehicles and the city is also the largest producer of windshield wipers in North America. Instead, these tariffs by raising the cost of production compelled U.S. companies to reduce employment!

Internal worries

No tariff can overturn the cost advantage Mexico has over the U.S. in labour costs. The national minimum wage there is a little over $4 a day while the average worker in the U.S. automobile sector earns $18 an hour. In effect, as Gao Feng, a Chinese government spokesman, said, “The U.S. is opening fire on the world, and on itself too.”

Second, the focus on trade crucially ignores changes in the U.S. corporate structure and industrial relations over the last 30 years which have led to the phenomenon of extreme inequalities in income and wealth in the country. Ever since U.S. President Ronald Reagan launched an assault against the air traffic controllers’ union in 1981, trade unions have been in retreat. In the years that followed, legislation and the courts have made it easier to fire union organisers, to use scabs to break strikes and for employers to campaign against unionisation of workers. As a result, less than 7% of private sector employees today are unionised, compared to a third in the 1950s.

Meanwhile, as Professor Robert Reich, Secretary of Labour under U.S. President Bill Clinton, notes, “anti-trust enforcement has gone into remission” and it has become easier for large companies to merge and form giant oligopolies. At its peak in the mid-1990s, there were 8,000 publicly traded firms in the U.S. stock market. In 2016, there were only 3,627.

Recently, Apple became the first company to have a $1 trillion valuation and today just 30 companies reap half of all profits produced by all publicly traded companies. In 1975, the corresponding figure was 109. Half of all the gains registered by Standard & Poor’s 500-stock index was delivered by just five companies: Apple, Amazon, Facebook, Netflix, and Alphabet, the parent company of Google.

The greater concentration of capital allows the giant oligopolies to raise prices which takes more of a worker’s pay cheque. Fewer companies means workers have less choice of employers and so have less bargaining power. Anti-poaching and mandatory arbitration arrangements further weaken labour’s hand. Moreover, the focus on short-term profits leads firms to use their capital to buy back shares, driving up share prices to benefit shareholders and top managers who have an increasing percentage of their compensation in company shares.

The Germany example

Take Germany as a contrast. Between 2002 and 2008, when the U.S. lost one-third of its manufacturing jobs, Germany lost a mere 11%. How could this be?

Since most German firms are privately owned, rather than buying back shares, they invested their capital in boosting their productivity. German firms include worker representatives on their corporate boards, invest in apprenticeship programmes, and in relevant research and development projects. During the recession of 2008-09, instead of dismissing employees outright, German firms reduced work hours and helped retrain workers. They thus have a deep pool of skilled labour.

When computers and numerically controlled machines are progressively inducted into production, constant upgrading of labour skills is vital to preserve well-paying jobs. Washington has made no systematic effort to upgrade skills. Tim Cook, the CEO of Apple, constantly emphasises that his company has shifted production to China not because labour is cheaper there but because it has a much wider pool of skilled labour than does the U.S.

Mr. Trump has neither the vision nor the inclination to address these structural problems of the U.S. economy. Like Don Quixote, Don Trump is merely tilting at windmills.

Writer: Ravi Arvind Palat is professor of sociology at the State University of New York at Binghamton

Pulling back from the brink

Extraordinary changes are required to prevent a ‘hothouse earth’ pathway

Just when we thought the news on climate change could not get worse, a group of scientists have published a paper in the Proceedings of the National Academy of Sciences deliberating on how the planet might move into a high temperature “hothouse earth” pathway from where there would be no return.

Earth’s equilibrium

We are living in a precariously equilibrated earth where the temperature is just right for ecosystems to flourish. The Holocene, which began about 12,000 years ago, is the stable epoch during which Homo sapiens settled and developed agriculture and other technological innovations. These led to social and economic transformations, which have brought the world to this juncture. Human activity, supported by the burning of fossil fuels and deforestation, led to an increase in greenhouse gas (GHG) emissions that are now causing global warming. This time period, the epoch when humans play a dominant role in shaping the earth systems, is being referred to as the Anthropocene.

The delicate equilibrium of the biosphere/earth system has to do with processes that amplify or dampen warming. For instance, melting of Greenland ice increases open waters that absorb more sunlight and then increase warming and cause further melting. This is a positive feedback. With the increase in carbon dioxide (CO2), chemical-weathering increases and removes CO2 from the atmosphere over geological time — an example of a negative feedback. When positive feedbacks become stronger than the negative ones, the system may change abruptly and get pushed out of equilibrium. The earth and its systems have shifted between alternative states through long-term processes over its geological history. Now, it appears we are approaching some critical thresholds.

Tipping point

The paper identifies a threshold beyond which the earth’s systems are no longer able to stabilise at intermediate rises in temperature. The authors point out that technology trends and decisions taken in the next decade or two will determine the path of the earth system over the next hundreds of thousands of years.

Many feedbacks respond either continuously or show abrupt change. A geophysical tipping point is a threshold beyond which a system moves from one stable state to another. This study indicates that crossing a threshold (roughly determined to be about 2º Celsius warmer than pre-industrial times) would lead to the tumbling of a series of tipping points, like a set of dominoes. The destruction of the Amazon forest due to wildfires, the loss of permafrost with warming, the weakening of CO2 absorption by the oceans or the melting of polar ice caps, among many other slow-moving catastrophes, are examples. The authors provide over a dozen examples of regional climate tipping points. If many tipping points tumble beyond 2ºC (as suggested by the scientists), it would irrevocably disrupt ecosystems and societies and there would be runaway climate change, taking us to a hothouse earth.

The authors identify three clusters of tipping-linked cascades, out of human control, that could happen over time with rising temperatures.

Atmospheric concentrations of CO2 (now over 400 ppm) are responsible for global average temperatures that are about a degree Celsius higher than at pre-industrial times. To find another time on earth with these levels, we need to go back some 3-4 million years to the mid-Pliocene, when sea levels were 10-22 m higher. The authors consider this stage to remain accessible only if there is a great deal of concerted effort in a remarkably short period.

In the mid-Miocene (about 15-17 million years ago), CO2 concentrations were 300-500 ppm and sea levels were 10-60 m higher than today. This is where the earth is possibly headed with continuing GHG emissions. Even if the Paris Agreement of 2015 is implemented and we managed to keep warming below 2º C or even 1.5º C, the risk of a cascade of feedbacks that pushes the earth into the hothouse path may be unavoidable. In order to stabilise the earth, we would have to recognise and then carry out deliberate, sustained action to secure earth systems and also adapt to a warmer world. Some of these feedback effects, such as loss of Arctic ice, could be reversed over a few hundred years, but others such as Antarctic ice would take much longer.

Global emissions have not plateaued, reportedly having risen by 1.4% last year. According to the authors, deep cuts in GHG emissions, increasing carbon sinks, finding ways to remove CO2 and perhaps even deflecting solar radiation to modify the energy balance would all be needed along with adapting to living in a warmer world.

Case for change

Technological solutions alone are insufficient. Fundamental shifts in social values and economic mores are essential. The changes required and ways to make them in an ethical manner are still being debated, with a lot of uncertainty on whether these can be accomplished.

Given history and the state of the biosphere, some scientists are not hopeful about avoiding the hothouse path. Others like James Hansen believe that it could still be avoided and the earth could stabilise at a rise below 2º C through infrastructural, societal and institutional transformations. Incremental changes along with increasing contributions from renewables and improvements in energy efficiencies would not be sufficient. There should instead be major changes in technological innovation, behaviour, values and governance. This is an unprecedented challenge for humanity.

Sujatha Byravan is a scientist who studies science, technology and policy

In search of greatness

Scientific achievement will only happen in a culture which celebrates great art, philosophy, sports

The Fields Medal, popularly seen as the equivalent of a Nobel Prize, is awarded once in four years to two-four mathematicians below the age of 40. In its long history, no woman had won this medal until 2014 when an Iranian, Maryam Mirzakhani, won it for the first time. No Indian has yet won it although it was also in 2014 that for the first time an Indian-origin Canadian-American mathematician, Manjul Bhargava, was awarded. In the recently announced prize for 2018, an Australian mathematician, Akshay Venkatesh, was awarded. He too happens to be of Indian origin.

Unpleasant questions

Some Indians might take pride in the ancestry of these latter two winners, but has the country contributed anything to their growth as mathematicians? Would Prof. Bhargava and Prof. Venkatesh have produced the work that won these prizes if they had studied and worked in India? This is not a pleasant question to ask, but parents are increasingly confronting similar questions when it comes to their children’s education.

This problem is not unique to mathematics. It is the same case with respect to the Nobel Prizes in science. Indian-origin scientists have won the Nobel in physics, chemistry and medicine, but post-Independence, work done in India has not led to a science Nobel. What really is the problem? If Indians studying and working abroad can have a great impact, then obviously the problem has to do with our systems of education and research. While it is true that being abroad brings greater visibility to one’s work, it is also the case that for a country which claims to have the third largest scientific manpower in the world, our creative contribution to science has been way below par.

This is a paradox considering the many brilliant scientists who work in Indian institutions, including the universities. Would these individuals have contributed more if they had worked outside the country?

In contrast, we can look at other fields in which we have produced world beaters. Chess and badminton are paradigmatic examples of how a whole generation of youngsters not only took to these sports, but under intense, and many time brutal, competition succeeded in coming to the top. These are not isolated cases; there is a systematic creation of groups of individuals who are reaching the pinnacle in these sports.

Similarly, we have global leaders in music, arts and literature. How is it that we have managed to be so original, creative and productive in the global domain in fields which have had very little support either from the government or the corporate sector? How is it that having invested all our energy in science education right from early schooling, we have only managed to produce collective mediocrity in these fields year after year?

Reasons for mediocrity

The revolution in chess and badminton was possible through great personal sacrifices of the players and their families. In many cases, securing even minimal funds from government or the private sector was difficult and the perseverance of parents, as well as the hard work of the children and the coaches, made this revolution possible. In contrast, the training for science begins from a state-sponsored and socially sanctioned education system right from primary school. At every step there are numerous scholarships, cash awards and incentives given to students to excel in these subjects. Although achieving greatness in science is not like that in sports or music, it is nevertheless important to understand why our contribution in science does not match this enormous cultural capital (in addition to significant funding) invested in science. I believe that there are three reasons that contribute to this culture of mediocrity. First is the nature of school education, second is the state of science administration, and third is our cultural response to the idea of excellence.

While all over the world, children are becoming more independent in terms of their intellectual practices, our students are becoming more and more like little soldiers marching from one class to another tuition. Right from their homes to their schools, it is one indoctrination after another. Science education is not egalitarian and is designed to keep people out rather than embrace diversity and multiplicity of background, language and talents. This is done in the name of merit, and yet it is precisely this merit that we lack on the global stage.

Science administration in India does not help. Given the amount of support from successive governments, it is remarkable that very little has changed in the excessive power invested in individuals in Indian science. Funding agencies like the Department of Science and Technology and a host of others which disburse hundreds of crores of rupees for research in science are not held accountable to the results of that funding. So many projects worth crores end up with some minor publications. Worse, scientists know best how personal contacts and networks are still so important in securing funds and other incentives in science in India today.

Perhaps not so surprisingly, the school system as well as science administration are both linked together by a common problem: the inability to understand and deal with excellence. In academic institutions across the country, it is far more difficult for a person to stand out in terms of high quality work since the system has little support for excellence. Part of the reason is that we do not have confidence in our own judgment of quality. Is it that we are embarrassed about greatness and much prefer to deal with mediocrity and ordinariness? As an institutional culture, is it that we prefer to discover greatness ‘outside’ rather than acknowledge it amongst ourselves?

Nothing in isolation

Finally, we have not understood another important aspect of greatness. Great work in any domain is not produced in isolation. Greatness is deeply cultural and arises from a particular attitude and not subject competence alone. For great work to be possible in science, the larger society has to produce great work in art, literature, humanities and so on. But we have produced a science ecosystem which does not seem to understand this, nor recognise how this insularity has only contributed to mediocre science.

Our education system has reduced the notions of competence and merit only to that of science, thereby denying the greatness inherent in so many other domains. Children who could have excelled in so many other disciplines and activities end up being forced to do science or being in education systems which put very little premium on other disciplines. At the same time, countless artists and musicians struggle to survive in spite of creating great work. There is no monthly salary, provident fund and pension for some of the greatest artists, performers, writers and others, yet they continue to produce work of greater quality than the average academic institutions in India.

Great science will only arise in a culture which celebrates great music, art, literature, philosophy, sports and so on. As long as this myopic vision of science, the hegemony of science education and the unprofessional cult of Indian science administration continue, we are not going to win Fields medal or Nobel prizes in science any time soon.

Sundar Sarukkai is a professor of philosophy at the National Institute of Advanced Studies, Bengaluru

A dangerous gamble

The Indonesian President’s choice for running mate is disappointing, though not surprising

Indonesian elections have a history of generating strange bedfellows. Yet, even by Indonesia’s flexible standards, President Joko Widodo’s recent announcement of his running mate for the 2019 general elections is disappointing, if not altogether surprising. His pick, Ma’ruf Amin, is an Islamic cleric with the kind of anti-liberal record that is antithetical to what the Indonesian President was once thought to stand for.

When Jokowi (as Mr. Widodo is usually referred to) came to international attention after winning a bitterly contested presidential contest in 2014, he was a genuine political outsider who had benefited from a wave of anti-corruption sentiment.

At that point his political career had spanned less than a decade, first as Mayor of a medium-sized city, Solo, and later as Governor of the national capital, Jakarta. Mr. Widodo stood out for his humility in a country where political elites are not known for it, as well as for his honesty and liberalism.

This last quality was largely an imputed one, less to do with his track record and more with his choice for running mate in the 2012 Jakarta gubernatorial poll: Basuki Tjahaja Purnama. Ahok, as Mr. Purnama is popularly nicknamed, is an ethnic Chinese Christian from the northern island of Sumatra, who operated in a political context dominated by Muslims from the populous island of Java. Mr. Widodo’s choice of Ahok as Jakarta’s Vice-Governor had signalled a decision to eschew identity politics in favour of policies focussed on clean government and economic development.

Four years down the line, Ahok is languishing in jail on blasphemy charges — and Mr. Widodo’s Vice-Presidential pick, Mr. Amin, helped put him there.

Centre of power

Mr. Amin is a powerful figure in Indonesia’s religious landscape. He is the spiritual leader of the Nahdlatul Ulama, the nation’s largest Islamic organisation that counts tens of millions among its followers. He is also the head of the Indonesian Council of Ulama (MUI), an umbrella organisation that advises the government on religious matters. Under Mr. Amin’s leadership, the MUI has issued a number of fatwas against minority groups that it considers to be heretical, like the Ahmadiyya and Shia communities.

The cleric is also a firm supporter of the blasphemy law under which Ahok was eventually convicted, and testified against him at his trial last year.

The ‘blasphemy’ consisted of telling voters that they shouldn’t be duped by religious leaders who misuse a Koranic to justify claims that Muslims should not have non-Muslim leaders.

Mr. Widodo’s choice of Mr. Amin as running mate reflects in part the delicate compromises necessary between the various factions of the unwieldy political coalition that supports him. But most of all it is a bulwark against accusations of impiety, a charge that, as Ahok’s fate proves, can blow up even the most popular politician’s career. Mr. Widodo’s lack of a strong Islamic profile has always been his political Achilles heel, a vulnerability exploited by his opponents in the past.

Over the years, the influence of religion in Indonesian politics has increased sharply, having been the deciding factor in last year’s elections for Jakarta’s governor (which Ahok lost).

Since coming to power, Mr. Widodo’s actions have revealed him to be more shrewd and practical than idealistic. He has made a series of compromises to accommodate the complex demands of his varied political backers. One example was his nomination of Budi Gunawan, an allegedly corrupt former aide to his political patron, Megawati Sukarnoputri, as Indonesia’s police chief (he was later dropped as Jokowi’s nominee and eventually sworn in as deputy instead).

No radical moves

In his term in office, Mr. Widodo has emerged as a tinkerer who makes subtle reforms where possible, rather than a revolutionary set on system-overhaul. In a country as diverse and fractured as Indonesia, this strategy has its advantages. It’s no easy task to juggle the expectations of a moderate base, increasingly powerful conservative Islamists, power-hungry coalition partners and the military. Mr. Widodo, with his strong approval ratings in opinion polls, has performed this balancing act with considerable skill.

Yet, there is a fine line between tactical compromise and rank opportunism. And the genie of identity politics once out of the bottle may prove impossible to put back in. Picking Mr. Amin as his running mate could help him win the election, but it is a dangerous gamble for the future of a country that has so far been a moderate beacon in an expanding sea of religious extremism.

Pallavi Aiyar has reported from China, Europe, Indonesia and Japan. She is a Young Global Leader with the World Economic Forum

Questioning Muslims’ loyalty

On two films, past and present, and the Indian Muslims’ loyalty

Reviews of the recently released film, Mulk, remind me of the 1974 classic, Garam Hava, in which the late Balraj Sahni excelled himself in the role of Salim Mirza. Both films deal with the question of the loyalty of Indian Muslims and their place in the country.

Garam Hava, which was set in Agra in the immediate aftermath of Partition, focussed on the forced eviction of Salim Mirza from his ancestral home as a consequence of his brother’s migration to Pakistan. Mulk is set in present day Varanasi. Murad (actor Rishi Kapoor) is victimised and his loyalty questioned because one of his nephews becomes a terrorist. The larger question that both films raise is the same: Can Indian Muslims ever be loyal to the country or must they face mistrust and hostility merely because of their religion? The knee-jerk answer to this is that terrorism has no religion and acts of individuals should not tarnish the image of an entire community. But this is not enough. Here are three irrefutable parts of evidence that show that the loyalty of Indian Muslims should be beyond doubt.

The first is Brigadier Mohammad Usman of the Dogra Regiment, the highest-ranking officer killed in the India-Pakistan War of 1947-48 at the age of 35. He was posthumously awarded the Maha Vir Chakra, the second highest award for bravery. Less known is the fact that during Partition, repeated attempts were made by Muslim League leaders — and according to some reports by Jinnah himself — to persuade him to choose Pakistan with the prospect of being appointed the first Chief of the Army Staff (CoAS). He refused because of his commitment to a secular India. Had this brilliant officer lived, he may have become India’s first Muslim CoAS.

The second is of Havildar Abdul Hamid of the Grenadier Regiment. Single-handedly, with his recoilless gun, he put out of action six Pakistani tanks in the battle of Khem Karan, arguably the most decisive encounter of the 1965 India-Pakistan war. He was killed while attempting to destroy the seventh. Abdul Hamid was posthumously awarded the Param Vir Chakra, India’s highest military honour. He was 32.

The third is of Captain Haneefuddin of the Rajputana Rifles who was killed while leading a unit at a height of 18,500 ft during the Kargil conflict in 1999 while trying to evict the enemy from a strategic position. He was 25. He was posthumously awarded the Vir Chakra, India’s third highest military honour, and the area where he died was renamed Sub-sector Haneef.

These are the three most celebrated Muslim martyrs who died fighting Pakistan. They answered with their blood the question that Garam Hava and Mulk raise. I am certain there are many more such martyrs who are not so well-known. Their numbers would be much greater if Muslims, now barely 3% of the armed forces head count according to unofficial figures, were represented in the armed forces in proportion to their population.

The writer is University Distinguished Professor Emeritus of International Relations, Michigan State University