Wednesday, February 18, 2009

Open Letter to US President Obama from India on simple solutions and policy reforms to revive and balance the US Economy.

To,

Mr. President, (Barrack Hussain Obama)

The White House,

1600 Pennsylvania Avenue, NW,

Washington DC 20500

This is the open letter sent to President Obama from us in India on simple solutions and policy reforms to revive and balance the US Economy.

 Dear Mr. President (OBAMA),

 At the outset, congratulations on taking on "The world’s biggest Challenge" for the next five years.  Like the whole world, which  sees you as a fresh breath of air for the US eco-system, I also hope that you too believe that most problems and the challenges they pose are soluble using simple common sense invoked solutions.  I am no economist, but common sense and logic helped me see a simple solution to solve multiple yet salient problems in the US of A using  the clinical third-persons’ perspective.

 To start with, the proposed idea not only solves the problems listed below, it will also auto-solve the by-problems that are created:

  • Economic slowdown
  • Growing Unemployment
  • Continuing Recession
  • Growing crime and drug abuse problems

 Since the solution lies in the problem itself, it is important to see the problem from another perspective and analyze the root causes of the US Economic Crises.

 Dependency on Import from other countries:

USA's new-found socio-economic vulnerability is due to it's dependence on other countries for both products and services.  The US consumers' dollars have gradually converted many poverty-stricken economies into large consumer markets, earlier non-existent in the Global consumer pie.  Growing globalization has crystallized the rest-of-the-world into a gigantic market, larger than the US which was originally the biggest consumer market in the world, weakening the USD, the erstwhile universal trade currency denominator. 

 The Price-sensitive myopia -

To commercially survive in the heavily taxed and excessively competitive US Marketplace, US enterprises had no option but to offshore jobs and production to maintain profitability thus, further weakening the US economy.  Consequently, as any weak economic space, US markets also became price-centric, propagating import of low-quality low-priced products from Asian markets, especially China.  Chinese import also increased US’s indirect contribution to the global carbon footprint. (US is aanyways teh largest poluuting nation in the world, and not due to it's size or industry, due to it's negligence to green issues) 

 Paradoxic Laws and Lack of Vision in Economic Reforms -

While rigid and stringent regulations and taxes choked domestic entrepreneurs, au contraire, the laws of the land did not apply to import of sub-standard products from countries using non-ecological and polluting processes, exploiting labour, even child labour.  This paradox in the legislations and the core values worked counter-productively on domestic entrepreneurs, discouraging new and existing entrepreneurs and impacting enterprise performance and employment.

 Drowning in their own credit -

In the Good old days, USA was a super-power with the largest bullion reserves. Today despite (as hearsay claims) the fact that, the ex-chequer does not print currency in proportion to the Gold deposits in the Federal Reserve Bank, and that they print as often, as much as they desire, the crisis is till imminent. It is the obsessive hunger for rapid growth which  intensely promoted the credit-based economy, so wide-spread, that the Super-Power of the world has reduced to mortgage packets that would occupy half of New York City.  The once cash-rich country has undone itself, due to it’s own impatience with growth pace.

 The full-circle theory applies to economy as well, albeit slowly, and as credit-laden consumers keep jobs only for pay-backs, there is little cash or security left  in their lives, this has made their decisions extremely  price-centric for all their consumable purchases.  Inferior foreign (read Asian) goods of  inferior quality became popular, making nations such as China richer.

 Offshoring to Survive -

The lack of adequate and visionary reforms in economic laws left entrepreneurs with no option, but to outsource jobs to cheaper labour nations like India, Indonesia and Africa.

 The key differentiators that have driven this migration of jobs and production are the most ironic, and thus Dollars out of the country to the third-world are low capital costs, low cost English speaking skilled/unskilled manpower.

 Irony of Language, Labour and Unemployment -

Uncannily, this was a problem created by US themselves, by their rigid labour laws and thus costs and high capital costs. There has never been a dearth of English speaking population in the United States. Just like the Government promotes recruitment in the army for young Americans, they could train students on Computer programming which is not astro-science really, and stop the exodus of jobs to Asia.  And most importantly, even when we outsource jobs to native Africans, the government failed to wake up even then and see that there were enough African Americans which could be made eligible if trained and employed in a special reformed economic environment.

 I call it ironic because, the entire world including us, focused on learning the language English because, US, being the Global super-power English was now the “Universal Business Language”.  And third-world countries learnt English to be able to conduct commerce with the large consumer market of the US.  It is ironic that the same US, needs to outsource jobs which require “English Speaking Skills” to the same third-world countries, despite a majority of Americans being fluent in the language, and a large chunk of them reeling under debt due to unemployment.

Solutions:

Pointed Reforms to solve Wide Problems -

US even today has abundant resource of unused horizontal space in the up-country areas and in the southern states where barren rocky landscape is wide-spread.  With this abundant space, if the legislation were to activate Special Economic Zones to promote enterprises to start producing goods and services under special taxation regulations earmarked for these SEZ’s, the same toys and ITeS would be home-grown, and would start revitalizing the domestic economy through the large volumes.  And just like we have seen the third-world transform into the developing world while producing Goods and services for American consumers, the SEZ enterprises would also create more jobs, more allied enterprises there from, thus compensating the SEZ’s loss of taxes and reliefs from the voluminous tax revenue generated by the newly employed and new enterprises.  The taxes individually may be rebated, but the volumes will compensate.  All this, while also becoming lesser dependent on foreign states for their own goods and services.

Stub mediocre imports and prepare for Carbon Credit Economy era -

With relaxed labour norms and tax rates, more enterprises would become viable, and the US could start competing with Asian prices, albeit with better Quality Control.  Also, considering that the Carbon Credits would again become the global currency in the world, consuming nations will have far lesser control over regulating their Carbon credits, and it would be the manufacturing nations which have state-of-the art ecological means and methods that would assume the dominant positions in the world, as they would be able to incentivize and contribute to larger deposits of Carbon credits.  Also, lead the global campaign on banning of goods made in non-green plants or using exploited labour, to curb the propagation and sale of sub-standard products in the world.

Enough Growth, now consolidate, Bring back the reality of Cash –

Only when you pay in cash, do you pay really sensibly and shop responsibly.  Americans are in the rut, that they got themselves into because of the trend of predating purchases, that could not be able to afford for years to come.  They spend the rest of their lives repaying and re-borrowing to repay, and thus there is no security, the moment they lose their income, making the economy brittle and vulnerable.  This vulnerability has made the once-confident Americansinto nervous wrecks who act only out of insecurity as the third-world used to till the recent past.  Mass job losses spell doom more in America than anywhere else in the world.  With cashing out culture, returning, America would hae gone the full circle of being a cash-rich and independent super-power.

 Show the power of colour – Black and brown with white collars

Finally, the African American and Asian population has always constituted the larger chunk of unemployed Americans sect, and that is explained due to their limited education leading to lesser white collar jobs.  Mr. President, if you viewed the African American and lesser income groups of America as the third world nation and formulated Training SEZ’s, which allowed them to learn specific skills for their vocational objectives, such as Computer Programming, Craftsmanship etc., you have the single largest potential workforce waiting to be converted in your own country.  And needless to mention, crime rates and drug running would substantially reduce.  This would also take care of both the other large problems concerning the US, underlying racism and terrorism.  With more Asians being moderated by education and employment, little room remains for radical fervour, which is nothing but idle unspent energy bottled up, which when spiked with religious or racist instincts unleashes the fury of doom being witnessed across the globe.

 If Indian, Indonesians and Chinese who barely speak English, are able to perform at ITeS jobs, and Call Center Jobs, so can the African Americans.  As Such, all the resources lie right here in your land, what keeps you from them is the maze of laws, regulations which have not evolved to the current proportions of have’s and have-not’s, making these laws quite obsolete and quite like anchors dragging the feet of development and Growth of Unites States of America.

 “Lead from the Front, Mr. Obama”, Bring US to the full circle -

Lastly, Mr. President, as it is said in all motivational communication, “Lead from the Front!” eradicate racism, regionalism, terrorism, recession, unemployment, and crime with the powers vested in you by the people of America and media from across the world.  Reform laws to employ the unemployed and motivate new enterprise, train, educate and employ the colours weaving them to into the social fabric of the US, promote realistic and patient lifestyles to make the country cash-rich and a super-power again. Give to the Americans the liberty the lady of the constitution promised them, and bring America to a full circle.  I wish you all the very Best.  

This letter has been mailed to the White House as well, and we await feedback.


Meanwhile, I invite your comments, even if knee-jerk on the above problems and solutions from all those who read this post. Comments help us write better.  Thank You for reading.  I would start believing in the blogspot medium the most, if I were to see a post from the White House.

 Love Baronia.

(Not an Economist)

3 comments:

Shridharan said...

The other side of the coin is also to be looked at:what happens to China in this scenario?Already the massive job loss due to shutdown of export manufacturing hubs in china is causing a reverse migration which in all likelihood cause social unrest.The other point is whether the overall global economy has created more capacity than is required in the short run which has to get corrected to ensure a demand supply mismatch.

The post is a interesting thought and a different perspective altogether.

dolly said...

Your ideas sound great,they could help the US economy some.
Next write to the president of India with some great ideas to help our economy too.

Love to Love,
Dolly

Anonymous said...

Great ideas. But remember, it is easier said than done. Remember, even in India we have many barren lands in many states which can be converted into SEZs for our own benefit and as said earlier, converting barren lands into SEzs is a whole new ballgame all together. Apart from cvreating the SEZ with special tax custs and the stuff, the government also has to build the infrastructure to suport it... roads, water, electricity, transport, communications etc. etc. etc.

But, overall, a good idea for newer (would-be) nations to take into account. ;-)

Nitin.