It is the time to act, not react

All politicians may not be statesmen; but all statesmen are, ultimately,
politicians. In democracy, good politics is all about appealing to popular
sentiments.

And that is what president Barack Obama did superbly when he delivered his
Budget speech on February 24, at the joint session of the US Congress. Speeches
do not solve problems, but they do help mobillize people. It is difficult to
believe that any major change will happen without peoples active participation.
So exciting people is as important in todays environment as devising policy
measures to bring the national economy back on track. Critics may call it
populism, but that is the essence of democracy. It becomes negative only when a
politician deliberately tries to mislead people.

We will rebuild, we will recover, and the United States of America will
emerge stronger than before, said Obama, straight from the heart, with lots of
belief, lots of reason, and without jingoism.

Yet, the next day, India woke up to the news of president Obamas plans to
curb outsourcing by American companies. We hear what we want to hear!

And we immediately went into the reaction mode. Journalists started asking
for comments and the industry top brass obliged.

Now theres nothing wrong about reacting to something as important as the US
presidents comment about the direction that his economy is going to take, if it
impacts us. The reaction, however, should be in sync with the action.

But didnt he refer to ending tax concessions for companies that offshore?

Sure, he did.

Let us examine what he said. ...we will restore a sense of fairness and
balance to our tax by finally ending the tax breaks for corporations that ship
our jobs overseas. That is exactly twenty-five words in a 6000-word speech. But
that is not the point.

The point is: why are we overreacting?

It is a no-brainer that what is the top-of-the-mind concern for the average
American today is jobs. In fact, the president acknowledged as much, in the
beginning. Its an agenda that begins with jobs, he said.

His sincerity to create/save jobs is not questionable. What is questionable
is whether he can continue with active discouragement of offshoring in the
long-term. Economics does not support that. And no, unlike what the Indian
industry has said, it is not about US industrys competitiveness; it is about
its survival. It is also about survival of US as the biggest power. So, that
will change. The reactions will not change that. Economic reality will change
that. Politics usually wins battles against economics. Economics always wins the
war.

I do not think this is something that the Indian industry does not know.

What, however, is the point of contention is that in the short run the US may
still try to do that. And you have every reason to believe that Obama would keep
his words in some way or the other, as he seriously tries to achieve the first
target on his agenda.

So, what is the option? Simple: create jobs in the US. Yes, economics does
not support it; but realities demand it. What stops Indian companies from
acquiring US firms which they can now get at a fraction of the valuation? That
will not only save US jobs, it will prove their commitment to the US market. It
will also allow them to get into projects that will see government spending as
part of the presidents stimulus plan. Money will be spent on healthcare,
education, infrastructure. The opportunity for Indian companies is huge.

But it requires a little change in thinking. A little more risk. A little
more deviation from what they are used to for decades. A little more
flexibility.

But these are extraordinary times. If we do not change ourselves now, when
else can we do that?

Shyamanuja Das

The author is Editor of Dataquest.
shyamanujad@cybermedia.co.in