The New Yorker May 19, 2014 Modi’s Role Model: Margaret Thatcher or Lee Kuan Yew? Posted by _John Cassidy_ (http://www.newyorker.com/magazine/bios/john_cassidy/search?contributorName=John Cassidy)
As several commentators _have_ (http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10832101/Modis-Thatcherite-talk-cannot-restore-Indias- flagging-fortunes.html) _noted_ (http://blogs.ft.com/beyond-brics/2014/05/19/guest-post-modis-task-is-thatcher-style-revolution/) in recent days, Narendra Modi, India’s Prime Minister-elect, shares several characteristics with Margaret Thatcher, the late British Prime Minister. Like Mrs. T., Modi is a product of the provincial petite bourgeoisie. Thatcher’s father ran a corner store in Grantham, Lincolnshire. Modi, too, came from a family of grocers: his father ran a number of tea stalls in the Gujarat city of Vadnagar. Thatcher was a strong believer in enterprise and the self-help ethos that often goes with it, and she disdained the metropolitan élites, whom she accused of bringing Britain to its knees. In seeking to put the “Great” back into “Great Britain”—that was how she saw her mission— she surrounded herself with right-wing oddballs and entrepreneurs, ignored the advice of her colleagues, and frequently acted dictatorially. Modi is cut from similar cloth. As the chief minister of Gujarat, he brooked few challenges to his authority. Scornful of the highly educated Anglophile élite in New Delhi, which has dominated India since it gained independence, in 1947, he cultivated business leaders, such as Mukesh Ambani, India’s richest man, and, during the national election campaign, he appealed to younger Indians—half of the population is under the age of twenty-six—who aspire to Western-style consumerism. In broad terms, his campaign message was very similar to the one Mrs. T. peddled thirty-five years ago: the old way of doing things is holding us back, so let’s sweep much of it away and unleash enterprise. There, though, the similarities between Modi and Thatcher may end. In terms of economic policy, Mrs. Thatcher was a Manchester School liberal: a fervent believer in the free market, free trade, and small government. She revered Adam Smith, she was mentored by Sir Keith Joseph, England’s version of Barry Goldwater, and she invited Milton Friedman to Downing Street. Given the political environment at the time, there was a limit to how far she could go in dismantling the postwar welfare state. But in breaking the power of the trade unions, privatizing nationalized industries, and encouraging a culture of naked individualism, she thoroughly changed Britain, and served as a role model for conservative reformers elsewhere. Modi, despite his embrace of business, comes from a very different intellectual tradition. In seeking to modernize Gujarat, his role models were Asian strongmen, such as Singapore’s Lee Kuan Yew and China’s Deng Xiaoping, rather than Anglo-American economists. In the “Asian tiger” model of development, which Lee and Deng, along with South Korea’s Park Chung-hee, helped to popularize, markets and foreign investment play an important role, but so does the state—by directing industrialization, building infrastructure, and distributing the proceeds. As Modi seeks to revive India’s economy, which has stalled in recent years, it’s likely that he will look to Seoul and Beijing for inspiration, rather than to London and Washington. Institutional constraints will also determine how far Modi can go in the Thatcherite direction. Britain is a small place with a strong central government; India is a sprawling federal democracy, which places limits on how much the administration in New Delhi can do. For the next year, at least, the Congress party, which lost the general election, will continue to control the upper house of Parliament. The nationalist Bharatiya Janata Party, which Modi represents, was originally protectionist and hostile to globalization; it supported a philosophy of “Swadeshi,” which involves promoting indigenous products and businesses. In the past fifteen years, the B.J.P. has changed a lot. Even today, though, it contains many constituencies, such as small-business owners and artisans, who are suspicious of liberalization and foreign investment. One issue that has these interests particularly exercised is the possible expansion of foreign-owned big-box stores, such as Walmart and Carrefour, of France. In its _fifty-page election manifesto,_ (http://bjpelectionmanifesto.com/pdf/manifesto2014.pdf) the party said, “BJP is committed to protecting the interests of small and medium retailers, SMEs”—small and medium-sized enterprises—“and those employed by them.” Some of Modi’s allies in the business community are quietly suggesting that he will simply ignore pledges like these and push ahead with liberalization, privatization, and the rest of the Thatcherite agenda. But will this happen? During the election campaign, he was studiously vague about what exactly he would do, largely restricting himself to bromides about improving governance, helping the poor, and sweeping away red tape, of which India still has more than plenty. Commenting in a Google Hangout organized by the American Enterprise Institute last week, Mihir Sharma, a columnist at Business Standard, an Indian financial newspaper, _pointed out that_ (http://www.aei.org/events/2014/05/14/can-narendra-modi-be-indias-thatcher/) , during his time in Gujarat, Modi favored reforming public enterprises, and installing new management, rather than privatizing them. If he follows that model in New Delhi, Air India and the state-owned banks and energy companies will remain in public hands. Sharma also noted that, in addition to cultivating some free-market economists, such as Jagdish Bhagwati, of Columbia University, Modi has been giving a respectful hearing to various activists at the other end of the ideological spectrum, including some who want to tax banking transactions and ban genetically modified food. “He seems to be listening to a large number of people, and we don’t have a clear idea of what his vision might be,” Sharma said. His record in Gujarat, Sharma went on, was “pragmatic and in-between. I think looking ahead we are going to see more of the same.” That seems to be the most likely outcome. Gradualism has been the motif of India’s transformation to capitalism ever since the early nineties, when Manmohan Singh, who was then the country’s finance minister, introduced the reforms that kick-started the so-called “growth miracle.” Contrary to popular belief, Singh’s Congress party didn’t give up on this reform agenda in recent years. A _2013 World Bank study_ (http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2013/10/16/000356161_20131016171237/Rend ered/PDF/AUS57570WP0P140Box0379846B00PUBLIC0.pdf) pointed out that Singh’s government and its appointees further liberalized the rules for foreign investment, opening banks, and starting infrastructure projects, to name three areas. But there was a common perception that initiatives weren’t being translated into action, and this, together with a slowdown in the economy that was partly engineered by a central bank worried about rising inflation, did in Rahul Gandhi, the Congress-party candidate. In short, Modi’s timing was lucky. In the coming months, his good fortune is likely to continue: with inflation now under control, the central bank doesn’t need to tighten monetary policy any further, and economic growth is likely to pick up. That will give Modi a bit of leeway to put together a reform program and sell it to the electorate. Relative to his predecessors, he is likely to emphasize manufacturing and infrastructure projects—two key aspects of the “Asian tiger” model—such as his proposal for a high-speed rail network. In addition, he will probably talk about expanding the ASEAN-India free-trade area and liberalizing India’s employment laws, which nearly all sides agree need some reform. In historical terms, though, that would all add up to more of the same medicine that India has been taking for twenty-odd years, rather than a radical break in a Thatcherite direction. -- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
