Musings on Democracy and the Economy: Part 2
Let’s talk about the economy now. The US is expected to enter a recession by the end of this year or next, and each passing day only strengthens that resolution. With a potential recession around the corner, political and social dissent is probably the last thing the American people, America, or the world wants. To hell with their problems, I agree, but their political issues have a way of making things worse for the economy and, in consequence, the rest of us. I cannot potentially overstate the importance of a stable US economy right now. With interest rates on the rise and inflation sky-rocketing, every economy globally is on edge, but the failure of the American economy will make it near certain that a vast majority of those global economies fail.
Take India, for example. We use and consume:
Google for search
Amazon for shopping,
Coca-Cola, Lays, McDonald's, and Dominos for our guilty gastro pleasures
Colgate/ Oral-B toothpaste and toothbrushes daily
Nike and Under Armour for the fitness geek in all of us
HP, Dell, and Apple, amongst others, for our electronic needs
Shows and movies made by the likes of Netflix, HBO, Paramount, and Disney on Hotstar (Walt Disney Company), Netflix, and Prime Video (The three largest OTT apps)
I mean, the list is endless. Hell, if this is the penetration of American corporates in India, where the GoI has enacted numerous laws to protect the domestic industry, think of the state of those countries where such measures aren’t even present. Think Tesla, think protection and then think of how we are still living in a world dominated by American corporates. I cannot think of a better example of the role played by American corporates in the global economy. And these are just the companies we deal with daily. There are countless more in the background doing the glamourous work in sectors like finance and IT.
Imagine if the American economy enters a recession or a slowdown. Most if not all American companies will experience a contraction in their businesses and, in turn, their ability to invest in markets like ours. The less stable, more vulnerable companies might cut down on the workforce and investments if they don’t head straight for the exit. All this won’t bode well for the growth and development of any economy dependent on the deep pockets of the American corporates. Even if we don’t experience a recession or a slowdown in the next 12 or 24 months, a rise in interest rates to curb burning hot inflation globally will pressure a business’s ability to execute expansion plans due to the rising cost of financing worldwide.
Moreover, with central banks vowing to prioritise inflation control over spurring economic growth, it is anyone’s guess as to the state of the global economy in the coming few months. The lack of a bright future for the global economy will stop the flow of the American dollars that have fuelled our budding startup scene or fledgling economy. While we can certainly create alternatives to American products like the ones mentioned above, we cannot create an alternative to the American capital markets. They are just too big to match.
I don’t need to embellish the importance of the US to the global economy. It is evident to all of us that the stability of the American economy is needed more than ever by the world. Indians can boast all they want- I proudly boast too- about the prospects of the Indian economy. However, they must not forget that these prospects can only be realised with an extensive capital infusion that will not come from multiple domestic sources. A handful of Indian players will play party to this effort to achieve India’s true potential, but a torrent of Internationa players, primarily from America, will be crucial. So, yes, if not for the sake of the American people, then at least for the Indian dream, let us hope that things don’t take a sharper turn for the worse than they already have.
Here’s to a brighter future, a more robust economy, and a more democratic world.