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Secretary of State Hillary Clinton concluded her trip to Asia on February 22 with a very practical declaration, according to reports in the International Herald Tribune. "The opportunities for us to work together are unmatched anywhere in the world," Clinton declared, on a hectic final day that included meetings with President Hu Jintao and other top officials in China.
Criticised for going "soft" on China’s record on human rights, Secretary Clinton stated that she did not want "these" disputes to interfere with the "critical challenges" like climate change, the global economic crisis, and security concerns.
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Change has come
President Bush peddled policy that made the oil industry rich. This earned Vice President Dick Cheney the title of a well-connected contractor for the oil and natural gas industry. But Secretary Clinton, it seems, has a different agenda. She is selling turbines manufactured by GE. While developing our own economy in the 1950’s, said Secretary Clinton, the US was not aware of the problems associated with using coal-fired power plants. But now we know better, she said. So use gas-fired turbine plants, she advised.
GE makes pretty good gas-fired turbines. If the Chinese buy them, it will add to US exports, maintain US jobs, and leave China will less US Dollars to worry about. Climate change and the global economic crisis get resolved in one swipe.
Freedom is confined to the ideals of Abraham Lincoln - packaged well for an election win.
And security concerns? Well, on January 21, 2009 President Obama signed the order to shut down the Guantanamo Bay Detention Camp within one year. There was a clear humanitarian reason for the action. But shutting down the Camp does not hurt the sales of turbines to any country. Fighting for humanitarian causes in the change-driven Obama Administration will be confined to select dustbowls in parts of the world that do no matter. Asking for human rights to be the main agenda item in China is definitely a risk to American exports " and American global strategic and security interests. Change will come " but it will be the same message from the other side of the mouth.
I recall the power point presentation made by then Secretary of State Colin Powell to the United Nations in February 2003 " over 6 years ago. He showed us the mobile containers that had chemical labs set up. Iraq was all set to blow up the civilised world. He played a recording of military generals to show that Iraq was nuking up. He showed receipts of Iraq buying plutonium from Niger. And he said he had spent 4 entire days at CIA Headquarters to ensure the information was accurate.
I thumped the table in appreciation as the US troops went in to liberate Iraq. No news of those mobile chemical warfare trucks since the power point presentation to the UN. Colin Powell, once considered a Presidential candidate, has slipped into relative obscurity. The Bush Administration saw a humiliating exit from American politics. The oil companies got rich in a war that was being waged ostensibly to ensure low prices of oil. And keep the Free World free.
Brown swipes his broom
And with reference to "transparency", it was Gordon Brown as Chancellor of UK who stalled a European effort to seek more transparency from hedge funds. London, you see, is the financial capital of the world and Mr. Brown had no desire to see an exodus of such "talent" to other jurisdictions. The Free World was ruled by master financiers based in London and New York who hated transparency. Prime Minister Brown was their champion and carried their flag for self-regulation and self-restraint.
Now Mr. Brown wants a "global New Deal". While Secretary Clinton was defining why human rights does not figure in the new economic order, Prime Minister Brown proclaimed: "We need a global New Deal -- a grand bargain between the countries and continents of this world -- so that the world economy can not only recover but... so the banking system can be based on... best principles," he said, referring to the 1930s American plan to fight the Great Depression.
"Best principles"? But we thought the hedge funds and the banks were the best principles " and Chancellor of the Exchequer Brown protected them to the point that they blew up the world!
End of "free" markets
Possibly, but I would argue that markets were never "free" " they were always influenced by powerful people to give a certain end result. Large companies have tended to dominate policy-making for years.
It was the multinationals that were behind globalisation. They saw the benefits of the "labour arbitrage". By moving factories to low wage countries they could maintain profits " and bring lower cost goods to keep the consumption cycle going than a "closed" economy would allow. In the end, this strategy allowed a few companies to get large (Sony, Toyota, and the Chinese manufacturing companies) and many new businesses to mushroom to support the global economic linkages. No mean achievement. But it did not stop the need to address a basic issue: people need to save, and consume less. That is what America will now do.
The large financial companies like Citibank were behind the removal of the Glass-Steagall Act - created after the Great Depression to restrict the power of finance companies. They wanted to operate in many businesses, across geographies. Glass-Steagall was an obstacle so it was removed. Well, companies like Citibank got their chance and became so large and complex that they took risks they never thought they had taken. And now they are dead.
In India we have had our share of companies that influenced government policy and then became so big and complex that, eventually, they faded and remain a fraction of their power and size. For decades the Birlas and the Dalmias ruled government policy in India. Now only one fragment of the Birla family survives in a respectable size. The Ambani family remains a force to reckon with in government policy " but they are increasingly under scrutiny for signs of eroding power.
ICICI, IDBI, IFCI, and UTI were the champions of Indian financial institutions. UTI remains a force " but after a scandal that forced a government bail out. ICICI is an embarrassment to conservative banking and resembles more of the roll-the-dice generation of banks that have brought the western economies to their knees. Thank God we did not have a Gordon Brown to protect them " though a fair share of Finance Ministers in India have sung songs of praise for ICICI. And Thank God we had a Dr. Reddy as the head of the RBI.
A Motherless Child
The consolation is that the markets were never "free" in the true sense of the word. And probably never will be. There will always be a Birla, Dalmia, Ambani, or UTI that will dominate policy making and hijack governments to further their cause and prevent the "free" markets from operating.
Just as there will never be a "free" world because there will always be a Halliburton trying to push for oil contracts in Iraq or a GE trying to win orders for gas-turbines in China. Any freedom we have is a residual function.
So, this is the Change that President Obama has brought to Washington and these are the leaders of the Free World. At least we know the show is over. Slumdog made history at The Oscars, and the world’s political leaders have just defined the history they wish to create.