In a world where politics often trumps economics, the historical success of the global economy between 1980 and 2020 raises questions about our current direction. During that era, prosperity soared as millions were lifted from poverty, primarily in nations like China and India. Yet, today, a discontented portion of society, especially the US Midwest working class, perceives change as a loss, influencing political decisions that challenge these economic principles.
The movement of industries overseas has led to a renaissance of cheaper goods for US consumers, driving a cycle of prosperity across emerging economies. This interdependence, however, masked an underlying issue; certain segments felt abandoned, igniting a political firestorm. Proposals like reciprocal tariffs reflect a backlash against the globally beneficial practices once standard, threatening the economic status quo.
Critics argue that the Washington Consensus, which championed free trade, did not deliver uniformly. While it presented mixed outcomes in regions like South America and Africa, Asian countries thrived by adapting policies with local needs in mind. This gradual, sovereign approach helped cultivate capable institutions, contrasting sharply with abrupt changes elsewhere.
China, leveraging its unique system, deftly navigated global regulations to forge a competitive edge. Meanwhile, India has hesitated in fully embracing market reforms, recently reversing trade liberalisation efforts. Despite some progress in foreign direct investment and tax policies, the shift towards a more structured industrial policy signifies a need to commit to the tenets of a liberalised economy.
For India’s aspirations of becoming a ‘Viksit Bharat’, deregulation emerges as the litmus test for economic growth. Where the US aligns towards reduced regulation, bolstered by the entrepreneurial spirit, India seems to be on the brink of recognising a similar path. The establishment of a deregulation commission hints at a new dawn for the Indian economy, prioritising private sector leadership over government intervention.
Conclusively, as the global economic landscape shifts, the introduction of a new MEGA consensus could safeguard prosperity. In embracing deregulation while nurturing entrepreneurship, India and the US may redefine growth narratives for years to come, ultimately illustrating that when politics harmonises with sound economic principles, the entire world stands to gain.
The article explores the tension between politics and economics, particularly highlighting the discontent among the US working class due to deindustrialisation. It critiques the move towards tariffs and the abandonment of beneficial free trade principles. Citing Asian economic successes, it argues for deregulation in India to boost prosperity, drawing parallels with the US and advocating for a new consensus to safeguard future growth.
As we navigate through the complex interplay of politics and economics, the historical lessons from the past four decades remind us of the importance of maintaining growth policies that enhance prosperity. With India poised to embrace deregulation, the common drive shared with the US encourages a hopeful outlook for future economic landscapes. Ultimately, fostering entrepreneurship while dismantling barriers will be crucial to realising the full potential of both nations.
Original Source: m.economictimes.com
