Twenty seven years back, Francis Fukuyama, the well-known social scientist, proclaimed the “end of history”, arguing that “what we may be witnessing is not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: That is, the end point of mankind's ideological evolution and the universalisation of Western liberal democracy as the final form of human government.”
Coincidentally, on the 27th anniversary of the fall of the Berlin Wall in 1989, Donald Trump was elected the President of the world’s most powerful and influential nation. When the result came out, the Financial Times editorially commented on November 10 that “The most powerful nation on Earth has elected a real estate mogul with no experience in government, a self-styled strongman, contemptuous of allies, civil discourse and democratic convention” — add to this his disregard for facts; his behaviour with women (see the book review in BS, November 14); his racist biases; that he is facing dozens of civil suits, many filed by students, for fraud, for deceptive marketing of his ventures; that he has promoted several now bankrupt companies but is personally a billionaire. If adult franchise democracies elect leaders like Trump, would more and more people be attracted towards a China-type of political system?
The most charitable interpretation is that Trump’s electoral victory was a result of the “revolt of the proletariat”, which has seen growing inequality and stagnant median incomes, even as the one per cent cornered the fruits of growth over the last three decades. If so, chances are that they could well be disappointed by what their chosen leader may do when in office: He has already promised tax cuts, with most of the benefits going to the one per cent. He is also likely to follow one more item on the neoliberal agenda: Deregulation of the financial sector, which arguably was the main reason underlying the financial crisis of 2008.
However, there are other elements of the neoliberal agenda, which he seems to oppose. One is his promise to impose high duties on Chinese imports to create jobs in the US. All that it may do is increase inflation, and reduce the consumption of the 99 per cent. (The poorest of them would also be hit by his plans to scrap health insurance paid for by the state: To be sure, this was never part of the neoliberal agenda, but of the European social democratic one). He has promised a huge increase in infrastructure spending to create jobs and help increase growth, whatever the impact on the fiscal deficit and inflation. He will also like to curb the independence of the US Federal Reserve in setting interest rates: No wonder, post-election, bond yields have gone up. He has also promised to throw out 3 million “illegal” immigrants, scrap free-trade agreements and erect a wall on the Mexican border to end illegal immigration from that country. Can we have any “rational expectations” about his policies, let alone their outcome — a fundamental assumption of macro-economic models?
What the election result will do is help the right-wing political parties in Europe — in France, Italy, Austria, Germany, Netherlands, some of which are facing elections shortly. One thing is for sure: History has not ended!
Last week’s demonetisation
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At the time of writing, the situation in the economy has still not returned to normal. Millions have suffered through the paucity of cash, standing in queues for hours to exchange Rs 4,000/Rs 4,500 of old money for new — or withdraw Rs 10,000/Rs 12,000 from their bank accounts. To be sure, exchange of goods and services survives even in the absence of money. Reports suggest that in many places, vegetables sellers, theatre-owners and restaurants are offering their wares on credit — or against demonetised notes.
Be that as it may, the success or failure of the demonetisation exercise will need to be judged ultimately by the quantity of demonetised Rs 500 and Rs 1,000 notes, not replaced by the new Rs 500 and Rs 2,000 currency notes. Will the demonetisation shock change the psychology of the tax evader? In any case, it is likely to give a strong push to mobile banking, and other electronic/digital payment devices.
One other point: Why should we call unaccounted money as “black”? It is a pejorative term used by whites. Surely, we should not consider “black” as synonymous with illegal/immoral?
Tailpiece: The feud in India’s oldest and most respected business house: Is it turning into a saas-bahu serial or something more sinister?
The author is chairman, A V Rajwade & Co Pvt Ltd; avrajwade@gmail.com