In the preface to his 1995 book ‘How Good People Make Tough Choices’, ethicist Rushworth M Kidder wrote that when he interviewed twenty-two leading thinkers around the world about the challenges they saw looming in the 21st century, six themes stood out.
Five of them were not surprising: the nuclear threat, environmental degradation, the North-South economic gap between the developed and developing worlds, the population explosion, and the need for education reform. These themes hold true today, too, showing how little progress we have made over the past two decades.
The sixth theme came up repeatedly, Kidder wrote, and he was surprised by how recurrent and worrying it was: the breakdown of morality. Ethics, the interviewees told Kidder, “was no mere luxury. It was central to our survival”.
Whirling around in a blur of noise, images and social media, I am sure a little voice deep inside is asking us how we are doing ethically as we head at breakneck speed into this century.
The answer is: not well at all. Most of us with access to technology, education and the limitless availability of knowledge are rooted to our chairs. We know a giant meteor is heading for us but we have nowhere to run. Take next week’s US presidential election. Markets are jittery about a Donald Trump victory, but will Wall Street be ecstatic about a Hillary Clinton victory? Not really.
I have avoided writing about the US election because it is absurd that the world should follow its tortuous course as if it were the most important election on the planet. Yes, the US economy is the largest in the world, and it continues to do surprisingly well despite a host of symptoms that say it should not be – but China’s economy is already the biggest in terms of purchasing-power parity, and China is passing through wrenching and weakening economic transition.
So why do we find the Nov.8 election riveting? It is the morality of the two candidates that is worrisome. If Trump boasts about running circles around the US tax system and is brazen about his misogyny, racism, bigotry and xenophobia, Clinton has her own little shop of horrors, from the dubious fund-raising she and her husband have resorted to for their foundation to the email time-bomb that has whittled down her opinion poll lead to a single, precarious percentage point.
On the other side of this smelly, open moral drain is a veritable ‘basket of abominables’, to adapt a phrase Hillary used (‘basket of deplorables’) to describe Trump’s supporters. This basket contains exemplars like Syria’s Bashar al-Assad, or the leader of ISIS/Daesh, Abu Bakr al-Baghdadi, or the charming Vladimir Putin, who is determined to use annexation (Crimea), naked military intervention (Syria) and the new world-war of cyber warfare to make Russia the greatest power by the time the 100th anniversary of the Bolshevik Revolution rolls around next year. Not forgetting of course the completely amoral politics that drove Britain’s Brexit vote, as well as lesser evils like the parlous condition of the European Union, the populist thuggery of the Philippines’ Rodrigo Duterte, and the zero-interest-rate miracle of the death-defying Japanese economy.
Which brings me to a presentation by Ratna Sahay of the International Monetary Fund (IMF) earlier this week on global financial stability. Although near-term risks like Brexit have been mitigated somewhat, we are in for a long phase of low growth and policy uncertainty. We are getting swept away by a tsunami of global gross debt, which now totals about $152 trillion or 225% of global gross domestic product (GDP). Worse, the private sector accounts for two-thirds of that debt. India’s debt equals 122% of its GDP, the IMF data show, while China’s is 225%.
What this means is that it will take a long time for global investment to revive. Coupled with a deepening slowdown of growth in global trade, which now trails world GDP growth, the rise of non-performing loans is dragging banks into deeper trouble by the day.
The IMF does not have all the answers. It is advising governments to tackle the slowdown – which I believe now looks set to be endemic – with a combination of monetary and fiscal policies and structural reforms. For instance, Sahay said, banks need to get far more efficient: in Europe half of banks’ branches collect only 5% of deposits. Government spending on infrastructure seems the best way forward in developing economies. India is lucky in having 800 million young people, as Prime Minister Modi reminded senior bureaucrats a few days ago, but not so the rest of the world, which is ageing rapidly. That huge demographic change will inevitably bring down productivity and purchasing power and place ever-greater burdens on healthcare costs as well as pension and insurance resources. In Japan, Sahay said, the IMF is urging more participation by women in the workforce and a greater opening up to immigration to tackle that greying society’s systemic slowdown.
Policymakers everywhere are struggling with huge unknowns. A new one will surface if, as is widely anticipated, the US Federal Reserve finally raises interest rates next month, soon after the new president is known. There will potentially be a flight of capital from emerging markets; will it further delay an investment revival?
The Modi government is moving steadily upward on a reform curve. Will it move quickly enough to stay abreast of the marching hordes of young and restless job-seekers and economic aspirants? And can India achieve prosperity in a straight and ethical line?
The signs are not propitious. The Uttar Pradesh and Punjab state elections, long before the official campaigns kick off and the candidates are known, are already plumbing ever-new depths of moral turpitude. Modi will hit the exact mid-point of his (first?) term in two weeks, and there is going to be much stock-taking. Although there has been a massive crackdown on black money and steps to be more investment-friendly, India did not fare well in the World Bank’s Doing Business rankings for 2017: it edged up only one notch to 130 among 190 countries. Hopefully, the ranking will be a spur for further reform.
Modi led celebrations of 50 years of Haryana state in Gurugram (aka Gurgaon) earlier this week. He urged the state’s people to aim at achieving the status of being totally free of open defecation, and to end female foeticide. “It is believed that Haryana has only farmers but see the exemplary success of businessmen from Haryana,” his office tweeted.
A few days earlier a canny businessman whose family had survived the subcontinent’s partition in 1947 and prospered from scratch told me he had just begun production at a new factory on Gurgaon’s outskirts. Had it been easier with Modi at the centre and his Bharatiya Janata Party in power in Haryana, I asked. Not by much, the businessman told me. “Every licence and permission had a price tag. If I hadn’t paid up, my factory would not have started production for at least another year.”
DISCLAIMER : Views expressed above are the author’s own.