Welcome to the new, new world

MARKET MANIAC

There is a major tectonic shift under way in the world order. India (and China and Japan and, indeed, most of Asia) is clearly one of the new focal points of what I would like to call the New New World Order (till a more elegant term can be found).

Globalisation and technology are changing the meaning of the word 'international'. When I was a kid, 'international' meant London, New York, Paris.

Some years later it became New York, Moscow, Paris. Then it became New York, Moscow, Tokyo. Currently it is New York, Tokyo, Shanghai. And soon enough it will be Shanghai, Mumbai, Tokyo.

Of course, this shift is simply part of a continuous global dynamic, where ways of thinking, acting and living keep changing as time rolls on.

This current wave started a long time ago, perhaps as early as the 1970s, when the Beatles made Indian culture accessible by turning Maharishi Mahesh Yogi into a pop icon.

Another loud signal of the ongoing change was heard "" although not much remarked on "" in the mid-1990s, when a whole herd of global MNCs, hearing about India's 250 million strong middle-class, came charging into the market.

In a few quick years they turned tail and ran. Statisticians were berated and the India growth story suffered a public relations reversal.

The truth, of course, was that the Indian consumer is no fool, unlike the American and other Old Old World (apologies for the still inelegant term) consumer. [Why can I buy a pair of Nike shoes in the branded Nike shop on Colaba Causeway at $ 20, when an identical pair costs $ 60 in New York?] S/he instinctively understands value for money and will only play at the right price.

And "" and this is again a key point "" the definition of value for money does not change materially as you move up the income curve, as anyone who has tried to do business with high-end Indian companies, and particularly Marwari companies, knows.

The huge hue and cry in the US about BPO is further evidence of this shift. While some of the noise is political, given that this is a US presidential election year, the truth is that BPO is merely a natural process element in the ongoing shift to the New New World Order.

It is only beginning to be fully recognised that labour arbitrage is just the icing; the real BPO cake is about a shift to higher efficiency.

India is already a much more efficient economy than the US. Not when measured in Old Old World economic parameters like productivity of labour and capital, but when measured in New New World economic terms like life satisfaction. Interestingly, there is already a new term "" Gross National Happiness "" coined to describe this.

I read an article a month or so ago about a young woman in Bangalore who works for an IT company "" let's call her Seema. She's about 26, rents her own apartment, rides her own vehicle to work, goes out to nightclubs a couple of times a week, enjoys spending money on clothes and sends some cash home to her parents every month. Her salary is about $ 450 a month. Now, just change Bangalore to Atlanta or Cleveland or Portland or any other American city.

This young woman's Old Old World sister "" let's call her Liz "" lives almost exactly the same life, except that it costs her closer to $ 3,000 a month to sustain it. [I am using the US simply as an example here; the job situation in Europe is substantially worse, although, to be fair, the Gross National Happiness is probably somewhat higher than in the US.]

What is worse (for the Old Old World) is that it is torn between its earlier principles and beliefs on the one hand and stark reality on the other. The conflict in the Old Old World was very clearly reflected in a cover story in an American newsmagazine some months ago, titled 'The Wal-martization of America'.

The article spoke about how the average American was being driven down the economic curve by the aggressive business practices of many US companies, notably Wal-Mart.

With technology improving internal efficiencies and enabling the sourcing of products and services from substantially cheaper "" no, let's use the new term, more efficient "" economies, the wages being paid to Americans were also falling. Wal-Mart was being taken to task for being the best at the two underlying themes of the American dream "" capitalism and technology.

Poor Liz can only see an improvement in her lifestyle if her costs go down "" and go down dramatically. Now, very easy to move up to first class, but awfully difficult to move down. This is why if you talk to Liz (or any of her brothers or sisters in the Old Old World) about the future, I suspect you will hear a real sense of pessimism or, at best, uncertainty.

Talk to Seema, or any other young Indian today, and you will get dollops of optimism. The youth of India "" and, I suspect, China and other countries innately know that the future is theirs.

They are the citizens of the New New World.

jamal@mecklai.com