Globalization: Nothing but Broken Promises

It has been around two years since the license of Johnson & Johnson to make cosmetics at a plant outside Mumbai was cancelled in March 2013 on finding that ingredients causing cancer to babies. But there had been no outrage by the highly qualified media (national and international), intellectuals and obviously government about this. This is quite strange and obvious as well. What we can expect from us than this? We as a nation prefer to just talk about something that has passed but not something that is challenging us.
This is not an isolated and single case of such negligence by the reputed MNCs in India. There have been a lot of controversies for different products qualities such as Nestle, Cadbury and soft drinks by Coca-Cola and Pepsi. In case of colas, claims have been made by farmers across India that they use different soft drinks as pesticide. Also there had been numerous reports that cola products can be used as toilet cleaner. That means colas are not good for health in any ways if these claims are true and can be substantiated. But there had hardly been any investigation about these claims. Rather these claims have underplayed by so called experts, media houses and intellectuals coloring these as false, saffron and other.
Besides these there have been a lot of controversies relating to transfer pricing mechanism, by MNCs to avoid taxation in India. Many MNCs have been found to be engaged in unethical and sometime illegal practices to decrease their tax liabilities in India while paying their homes countries and some were found to be trying to avoid in both the countries by misusing transfer pricing practices and different bilateral and multilateral taxation treaties between India and other countries.
Apart from these there is a question about these MNCs ethical behavior. It is not just J&J but many other MNCs across other developing countries have been found to be engaged in such unethical as well as sometime illegal and immoral activities and when caught red handed found to assort to arm twisting by their governments. Nike was found to be engaged in sweatshops practices in Asian countries. Controversies relating Vodafone in India regarding taxes are not very old when the governments India and the UK had to intervene in the matter and finally Vodafone succeeded in arm twisting India.
These events are just some examples. There are numerous such examples. These practices by MNCs just put one question about the globalization. “Is it the real face of so called globalization?” Perhaps this is the real face of globalization. Joseph E. Stiglitz has rightly said in his book 'Globalization and Its Discontents' that the international institutions have broken all the promises that they had been making.

A Different World Post-Financial Crisis

Historical events like the Great Depression, World Wars, and pandemics have had a marked impact on individual’s life course and the current financial crisis that caught the whole world into its grip seems to have similar impacts on lives of people. The crisis that resulted from the financial crisis in the US has hit people from every part of the world and walk of life. Current world wide economic downturn has changed not only changed the way of life people had been leading but also the way they think. It has not only brought millions of people on their toe but also many nations as well. The economic downturn has made nearly every country poorer than pre-crisis era but the developed countries have been hit hardest by the crisis

Sustainable Development: Nothing but a Trade-off

The history of human beings tells that in the process of growth and development it is natural for any society and civilization to move towards modernization, urbanization and industrialization of its economies. And it is continuous process that never stops as there is no stopping where it can be said that it is done. Rather societies and civilizations demands more from this process and often lead to imbalances. Also the definition and yardsticks for these processes change over time depending on societal awareness.

Following the same ethos, at present the world is moving towards modernization, urbanization and industrialization of economies. This process of modernization, urbanization and industrialization of economies has huge impact on the economic activities and environment and has resulted into increased population, agricultural output and industrial production etc. But at the same time it has resulted into degradation of environment because of increasing pollution from the increased industrialization. Although the increased economic activities have negative impacts on the natural resources and environment but even after it, sustainable development of societies and economies is possible and can be achieved by taking care of the issues relating environment. For this societies and countries has to take initiatives in all spheres of lives such as inequality and poverty, the direction of industrialization and urbanization, population and education, lifestyle and use of fertilizers etc. because all these factors have long term relationship with each other; sometime direct and sometimes indirect.

Rising Inequality in the Whole World is Alarming for Policymakers and Economists

In last 5-6 decades the whole world has witnessed a sea change in its shape, character, life and profile. Everything since 1950 has changed. There is hardly any colony in the world today. On average life of people has bettered during this period. The percentage of people having access to basic education, health services and other basis needs have increased significantly. Also according to an estimate the prosperity in world has increased by around 25 times during this period.
These achievements altogether are something about which world can appreciate in general. But once we look into particular regions and countries all the achievement seems to be of no use. And if we look at the world as two lots such the poor and rich, the scenario is even worse. Countries like China and India have seen huge economic prosperity but regions like Africa during this period seems have remained immune to the growth and development that has taken place. Country like Republic of Congo has poorer than what it was during 1950s. Country’s wealth is now half of 1950s level. Also if we look deeper into the developed and developing countries like the USA, the UK, China and India etc picture in these countries is also grim.
During this period of around 60 years, the world as whole has become richer and prosperous place but at the same time the inequality has increased significantly. The whole growth and development that has taken place has benefitted the rich and poor have been treated as lesser child during this era and this is true for individuals and countries both. Relatively the rich has become richer and the poor have become poorer. Reports suggests that most of the wealth of world is in hands of less than 100 individuals and this true for both developed, developing and least developed countries. In case of developed countries this inequality looks to be sharper than developing and least developed countries. Perhaps that was the reason why the USA had to face the movements like Occupy Wall Street and the rest of world also felt the heat of same.
This is an alarming situation because this increasing inequality is going to have impact on overall public discourse across the world. Also globalization seems to be a factor in increasing inequality as it provides opportunities to businesses to increase their wealth dis-proportionally. So this is the time for the policy makers to think to curb down the increasing inequality and theories working behind the globalization needs to be reviewed by the economists so that it is more beneficial for common man on the street than being tilted in favor of money power.

Reasons of Repo Rate Cut by RBI

Finally RBI has cut down the Repo rate by 25 basis points from 8% to 7.75% and stock market responded as expected with the prices of different stocks from different sectors saw sharp rise. But question arises why RBI has taken this step of cutting repo rate at this time while it was ignoring the same demand from industry and financial sector since last 6 months as the inflation had not very high since July 2014. Answer of this question obviously not easy one but what I think is as discussed below.
RBI had been a conservative regulator in the world reflecting the typical Indian attitude that tries to lower down risks on vital and important issues relating mass interest and it remains to the same even in times of current governor Raghuram Rajan. So stemming from this cultural attitude RBI had been very observant and conscious about the inflation and it wanted to ensure that economy again would not undergo the inflationary pressure. Perhaps this six month period was enough for RBI to have confidence that the present economic scenarios would be favorable enough to take this rate cut decision.
Along with the lower inflation in the economy, global economic scenario is now a cause of concern for RBI and other regulators across the world. The world economy is again showing signs of slowdown. Europe again seems to be falling into its own traps with Greece leading towards grave economic issues. Also the falling oil prices is now a concern for the whole world as there are a number of countries that are highly dependent on oil for their revenues and falling prices would result into lower revenues for these countries leading to lower demands for goods and services. Countries like Russia, Iran and other Arabian countries are facing the heat of falling oil prices. This will as a whole increase the problems relating to slowdown in world economy.
On the other hand, falling oil prices are good for country like India which has to import most of its oil from other countries. This would help to save huge amount spent on imports. But this gain is not enough to compensate for the possible losses due to economic slowdown in rest of the world. This can only be compensated by increasing growth rate in economy and for that low cost money is must. So RBI seems to have considered these issues while taking decisions relating to rate cut and it is quite possible that in next review another rate cut may be possible and this time more direct.