Manmohan Singh Dances to Obama’s Tune in G20 Conference at Seoul

Article first published as Manmohan Singh Dances to Obama’s Tune in G20 Conference at Seoul on Technorati.

The Prime Minister of India has proved that so-called Manmohanamics is nothing but making India subservient to the interests of the western imperialist countries, particularly to those of the US on an international forum, G20. During his speech in G20 conference held at Seoul, South Korea on November 11 and 12, he danced to the tune of the US President Obama on the issue of current account deficits being faced by the US. He gave chorus to the US’ song deviating himself from his colleagues of emerging market economies.

CAD vs. CAS

Manmohan said in the G20 conference, “Major industrialized countries were running unsustainable current account deficits which have to be reduced to manageable levels.” Up to this point, no one needs to object. He then added, “If this is not to have a contractionary impact on the world economy, it must be offset by reducing current account surpluses elsewhere. This rebalancing requires pursuit of appropriately coordinated policies in our countries.” And, there he was, referring to his neighboring developing country, China.

So, Indian prime minister was telling that in order to reduce the trade deficit and hence the current account deficit of the US, China has to reduce its trade surplus and hence of course, its CAD. He is suggesting the China and apparently other surplus countries have to take appropriate measures like coordinated policies, to reduce their surpluses so that deficit countries may be prospered and reduce their trade deficits. That’s what he called rebalancing. Isn’t this the one vigorously being proposed by the US president Obama and its treasury secretary Timothy Geithner? Yes, it is.

Manmohan vs. Montek Singh

Whether Manmohan was aware of it or not, his market economy oriented friend and the Vice Chairman of India’s Planning Commission said on the sidelines of the G20 summit on November 11, "The real issue is given that it is a problem, how do we coordinate policy? I don't think you should be too demanding ... because such policy coordination has never been attempted before."

Montek Singh advocated the G20 nations should not be too demanding on policy coordination while his Prime Minister said the G20 nations should pursue appropriately coordinated policies. Probably Montek was talking out of his conscience and Manmohan out of his desire to appease his imperialist boss, Obama or the US.

Did the US follow the same principle before 1985 when it maintained trade surpluses? Can Manmohan convey Germany, Japan and other surplus countries to narrow their surpluses and help reduce deficits of the deficit-ridden countries? Manmohan should have named the surplus countries and directly tell them to reduce their current account surpluses and have faced the consequences. He was praised as “the world’s most intellectual” during Obama’s tour to India from November 6 to 8. If Manmohan wants to express his gratitude he shall praise Obama picking up his skills like orator, first African president for the US and so on. Instead, he chose to sacrifice CASs of other countries like China and Germany. Should one take it as his naïve or subservience? This author prefers the later.

EMEs’ Growth Prospects

Manmohan added, “Uncertainty about the prospects of industrialized countries affects the investment climate and dampens the medium term growth prospects of emerging market countries.” He must be reminded of what IMF director Dominique Strauss Kahn was telling to EMEs for last six months or so. Strauss Kahn said that the EMEs had to develop their domestic markets and to increase domestic demand rather than relying on export markets, thereby helping the US reduce its trade deficit and current account deficit.

If one looks at the statements of the heads of these G20 countries over at least a year, it will be entertaining to observe full of contradictions among themselves. One may find contradictions in one’s own statements also over a time. It is not to say that they are aimless or clueless. The present economic system itself is the feeding ground for such contradictions in which big businesses hunt for profits depriving the purchasing power of the consumers on whom they depend for more profits. It is the contradiction developed out of disparities in income distribution. Those who produce get minimal or almost nothing sometimes of it, while those handful of the people who do not take part in production, amass major share of the wealth. Unless this fact is accepted, even thousands of Harvard schools may not produce brains that can solve the economic crises in the capitalist system of production and distribution.

Technorati Tags: Manmohan,Montek Singh,EMEs,Trade imbalance,Current Account Deficit,Growth

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