Gaurav Dalmia & Jayant Sinha: India’s Post-Pandemic Path to Prosperity


INET board member Gaurav Dalmia and former Indian Finance Minister Jayant Sinha discuss how India can emerge from the pandemic with greater prosperity

Transcript

Rob Johnson:

I’m here today with Gaurav Dalmia, president of Dalmia Group Holdings, which has holdings in business and financial assets. And I’m also with Jayant Sinha, a member of the parliament and the chairman of the standing committee on finance in the Indian parliament. Gentlemen, thanks for being with me today.

Jayant Sinha:

Thank you for having us Rob.

Gaurav Dalmia:

Thank you Rob.

Rob Johnson:

We obviously are making this podcast here in April of 2020. Where everybody is consumed by the consequences and the powerful response that is necessary to the pandemic that’s called COVID-19. Each of all, I’ll start with Jayant but I’m going to ask the same question of each of you. What are we learning as you observe the responses around the world? How does what has been reveled in the presence of the pandemic suggest that we’ve somehow been off course in our social and system design? And what do you see around the world that is inspiring, that has the, how I say, potential to help us stabilize and have a prosperous future? Jayant, please.

Jayant Sinha:

Thank you very much Rob again for having us, and you started off this discussion with a very profound and thought provoking question. Because what is the corona pandemic showing, is that we are similarly unprepared for black swan events, let along a mega black swan event, which is what the corona pandemic is. The sad truth is, that thinkers thought leaders have been preparing us and warning us about a pandemic like this for a long time, but when it came we were absolutely unprepared to deal with it. And it really demonstrates that we just don’t have the systems, and we don’t have the multilateral institutions that will enable us to deal with that. So that is very clear that we are unprepared globally and at the country level, in dealing with these mega and very serious black swan events. So that’s I think the first learning.

The second learning is that when these kinds of catastrophes come upon us, the global response the global cooperation does not really engender much confidence. And apart from a great deal of bickering and finger pointing, we do not really see a coordinated response which is really necessary for something of this sort. And of course that extracts just untold human costs. So that’s very clearly happening as well.

The third thing I will say is that at the country level, and certainly in India we have demonstrated that as well, that there has been a range of responses, some of which have been excellent. And I would really put India’s handling of the whole matter in that category of being very excellent, being very preemptive, and getting ahead of the curve if you will. And that’s really what we’re seeing happening across the world is each country is dealing with it in its own ways, given its own societies, given its own morals and its own state capacity.

And there’s a lot to be learned from all these different experiences, but at the end of all of that, if were to just step back and say, where are we right now? I would say that we are still in a very, very serious situation. We’ve done really, really well in India, but non the less, we’ve gone from a situation where cases were doubling every three or four days to doubling every ten days. But even doubling every ten day is a very, very catastrophic situation. We are at least six months before any cures would be available. And in 180 days, if this continues to double every ten days we will still be in a very catastrophic situation. So that’s kind of what we’re seeing right now. And obviously the quicker science can get us a solution, the better off we’re going to be.

Rob Johnson:

Gaurav, your thoughts?

Gaurav Dalmia:

Well I would echo similar thoughts I would say. One I would say is because we’ve been immensely successful as a society, a global society, we’ve kind of not talked through long term risks, and today we are facing one of those. It’s made us somewhat complacent. We are overconfident of technology. We are overconfident that people will solve problems, which in the long term is true. But I think in the near to medium term often we find the challenges overwhelm us, and therefore I think we need to balance that confidence with a little bit of humility.

A second point I would make is the same forces that have made us strong, the global linkages which has made us prosperous and strong as a society, is the same globalization which is somehow weakening us at this point, in terms of the pandemic spreading to one place to another. And so on and so forth. And therefore we need to understand that every strength at a certain point can become a weakness.

Thirdly I would say that typically we tend to focus on top down views of governance. But if you look at some of the success stories in India, particularly in the state of Kerala, Bihar and [inaudible 00:06:02], I would say that the patterns of approach to governance has actually worked very well as well. And we don’t emphasize that often enough, so I would emphasize that.

Fourth I would say, Francis Fukuyama wrote this book called Trust, which spoke about how societies that have innate trust actually tend to do better than societies that don’t. And this is the time where all of us need to come together, whether we are businesses, government, NGOs, retailers, we have to come together to solve problems. And not just leave it to health professionals to solve the problem. And I think this is one of those test we need to pass. And lastly I would say, there’s this feeling amongst people that someone else will solve the problem, and I believe that mindset is wrong. There is no someone else to solve the problem, whether it’s climate change or the pandemic or anything else, it’s for us individually to see how we might act. And we need to have a sense of agency about that.

Rob Johnson:

How do each of you see the challenge being somewhat different or greater in emerging countries? My own intuition is that there is what you might call relatively mature infrastructure in many of the advanced countries, and now the fiscal bourdon of dealing with something that’s this disruptive to the supply side and requires a lot of action, fiscal action by the government. I would guess that it’s very stressful, because that fiscal capacity could have been used for many other things, that would facility development in moving up in terms of prosperity for your entire society. Is it harder in an emerging country now, is it demoralizing, is it setting people back? How does it differ between there and say the G10 countries?

Jayant Sinha:

So Rob I think the recovery in the developing world is going to be much slower than it would be in the developed world. And there are a number of factors that drive that. Number one of course, the health infrastructure is much weaker, so the impact will be larger in terms of the pandemic. Secondly, as you’ve pointed out far more limited fiscal resources and therefore the ability to stimulate the economy or deal with the health issues as well as deal with the economic development issues, is limited. And in addition to that, many, many countries in the developing world are commodity exporters. And of course that is going to be hit very, very hard. In India we are very fortunate, we are a commodity importer, so we’ll benefit in terms of lower oil prices, lower commodity prices. But that’s not true for the majority of countries in the developing world.

So because of their limited fiscal resources, because the health infrastructure is so much worse, and because their exports are going to get hit, their ability to recover from this sock is going to be much more constrained compared to the developed world. Now there’s one positive side to this, which is that immune systems, potentially the BSG vaccine, these may confer to the developing world, and of course it has a younger population as well. These factors may mean that even though the coronavirus spreads much more exponentially among our populations, that we’re able to withstand it better with lower hospitalization and mortality rates. So that maybe the offset to some of this, but non the less when you put it all together it does appear to mean that while the developed world will suffer significant economic contraction, its recovery will be relatively quick, and they’ll be able to power their way through it. The developing world on the other hand is going to find it quite difficult to get through this.

Rob Johnson:

Yeah I’ve been reading quite a bit, our commission on global economic transformation is developing a report, and I’ve got a number of staff members working on the continent of Africa. And the mention of the word trust, Fukuyama’s book being a very nice illustration of what is at stake there. What we see in Africa, throughout the continent, is that the average age of people in governance is well over 60, and the average age of the population is about 28, which is quite a divide. And the younger people have no faith or trust that the governance is going to be directed to creating a prosperous future for them. In Africa, the working age population over the next 40 years will go from about 1.2 to 2.6 billion people. But when the pandemic emerged, the number of officials at multi lateral banks, intelligence agencies and others that I have conversations with, they are afraid of chaotic and wide spread social unrest. And the resources and the trust are not at all adequate to meeting this challenge.

Let me shift, Gaurav, let’s zoom in on India. How do you see India responding, and what more would you suggest the country do? And please share with me from the standpoint of a business man, it feels like we’re all in this together, all hands on deck. What do you feel is the… How would I call it? The magic that the business community can contribute and invigorate everybody’s sense of comfort and sense that this is a transient phenomenon?

Gaurav Dalmia:

Rob, the way I would look at it is, there are various ways in which we can solve social challenges in India today. So let’s take one axis, which is Rawlsian versus utilitarian. You can move from Rawlsian which is how do people at the bottom of the pyramid benefit, to utilitarian, how does the average benefit. Another axis of authoritarian to libertarian. And different countries may respond in a different way. I think India has responded on the spectrum as Rawlsian and somewhat authoritarian. And any solution that you find will get criticized, right? So Indian will have its own criticism, the US will have its own criticism, China might have its own criticism and so on and so forth. But given that it is, I think all of us need to come together to solve these problems. If you look at the migrant labor issue, that is one of the biggest problems that this transition is facing currently. Of course there will be economic issues that we will see as a result of this, but here and now the migrant labor issues are a big problem.

We’ve contributed towards a feeding program. I know other business people who have contributed towards health and feeding programs for migrant labor. And I think we need to do more of that. In terms of businesses, I think we need to be prepared for helping the SME community. So I think small businesses have a lot of problems and challenges of short term finance and so on and so forth. And it is not only the banks who can solve these problems, because many of these may or may not be bankable. They raise money from friends and family and informal sources, and typically it is their ultimate customers which are bigger business who need to support them, with short term cash flow infusion and so on and so forth. And that will help. I think in terms of the recovery, we should also prepare for recovery, and I think lessons from China are very indicated. So if you look at just some China statistics… Oil consumption fell down by almost 25% in China. It’s now down by only about 5%, I believe.

So we need to prepare that we will have a bounce back, whether it is three months from now, six months from now and we were like china, but that will happen. If you just look at some of the google maps data, peak traffic condition in China in major cities is returning to normal. Off peak is not yet returning to normal, so we need as business to prepare for that kind of demand coming back. The Chinese recovery is being led by construction and infrastructure. Now that may be something to do with the Chinese stimulus package, but I believe similar stuff is happening in Spain. So again we need to be prepared as businesses, to respond to that kind of demand pick up as it happens, whether it is in conjecture or it’s in other sectors. On the whole I believe business need not be a passive partner, it needs to be a more active partner, as we get out of this current crisis.

Rob Johnson:

Jayant, do you see things in India that are really what you might call innovative in relation to what’s happening at other places in the world?

Jayant Sinha:

That’s a great question Rob, and I would say yes in a limited way. I think in terms of science and technology, innovation with respect to new testing kits or new drugs vaccine, I think there we have limited innovation, we could do much more. We have come up with some new testing approaches and so on, but as far as drugs are concerned as far as the vaccine is concerned, we are definitely following what the US and the UK and others are doing. So we really haven’t innovative as much as we need to as far as science and technology is concerned. On the other hand when it comes to managing the lock down and coming up with administrative approaches and innovations to keeping 1.35 billion people pretty much at home for now, close to 35, 40 days, I think we’ve done that remarkably well. And there has always been this criticism of India that we have weak state capacity, but I think what we’re demonstrating through this very tight lockdown that we are following right now, which is perhaps the tightest lockdown in the world and still maintaining social peace and harmony.

And maintaining food supplies and other essential supplies to our people, is that we actually do have extraordinary state capacity, particularly when it’s operated in mission mode. So the way in which we have handled these challenges of maintaining this tight lockdown, and at the same time getting this unprecedented social sort of corporation. And Gaurav alluded earlier to the whole concept of trust. I think the trust that people have right now in the national leadership, in what we are doing in terms of supporting them through this very difficult time, I think that is very innovative, and certainly I think unprecedented when you look across the world, and that’s reflected in the ratings that the honorable prime minister has right now. One survey had him at 93.5%. So I think in that sense, there has been real innovation in terms of managing a very, very tight lockdown and enabling trust among all sections of society.

Rob Johnson:

Gaurav, you’ve shared with me recent writing about the relationship between what you might call religion or different philosophies from all around the world, and how this might be… How would I say? A very important time to regenerate the vision of what a business is, what a business is for, or what constitutes success. As you see the private sector… How would I put it? Compelled by the pandemic, not to just focus on shareholder maximization, but with the power with the capacity, with the talent with the systems to contribute to the whole world. How does that intersect with your philosophical deliberations?

Gaurav Dalmia:

Let me start by saying, there’s a book by Chris Anderson and David Sally, it’s called Numbers Game, and I’ll take you to soccer, because it’s a book on soccer, not really on religion. And they compared basketball and soccer, and they say that in basketball, you can play a strong man game, which means if you have one strong player or you bet on your strong players you can win a basketball game. Soccer, because it’s a larger field, a more complex game, one person cannot dominate the court, or the soccer field.adn therefore you need to sort out your weak links. So from a philosophical approach, society is much more complex than a basketball court, just like soccer is much more complex than a basketball court. And therefore we need to invest all our energy, not just in the strong links, which is what we sometimes attempt to do, but towards the weak links. So I would say that would be one of the things that I would take away.

Secondly I would say that life in many ways is self fulfilling. If we believe we will succeed, we will innovate and we will succeed. So for example, I believe the bicycle was invented because there was a volcano eruption in the 1800s in Indonesia, which led to ash formation and cooling of global temperatures. And therefore the harvest of oats was very low. As a result, horses couldn’t be fed, and that led to the invention of the bicycle in Germany. Obviously the french named the bicycle after that. So we have to be able to bet on things like that, that human ingenuity will actually win if we believe we can win.

Rob Johnson:

As I listen to you talking about soccer versus basketball, I’m reminded of a podcast in the series by Malcolm Gladwell a couple of years ago. I think the series is called Revisionist History. And he was talking about how in the realm of education, people sometimes do the wrong thing for creating an education system. They tend to go where the donor gets validated. But he brought up the game of soccer, and he said if you go hire a superstar for 50 million dollars, like Beckham, it creates a celebrity energy. But if you use that 50 million dollars to improve the quality of players number 6 through 11, you win championships.

And it was fascinating to hear you talking about soccer and the nature of the game, rather than the one superstar, the interactive teamwork. And I’ll have to put that on the website associated with this podcast, because I thought Malcolm Gladwell, he did three episodes that were about how to construct and education system and use that as an analogy. Gaurav, as you’re looking around the world, what good examples and bad examples do you see in countries outside of India, that you would like to underscore and illuminate?

Jayant Sinha:

Well we certainly need to understand exactly how in another very large densely populated country which is China, that they have been able to get back to normalcy. And obviously they locked down Hubei Provence very tightly, but we’ve done the same thing. And they’ve been able to get to a point where they don’t have any domestic infections anymore. Whatever infections are coming from outside the country. So clearly they have been successful at an unprecedented scale. Certainly Australia has been successful as well. I’m told that new infections there have also pretty much stopped. Certainly Korea has done remarkably well, Germany has done remarkably well. So whether you look at democratic countries or non democratic countries, you look at tropical countries or temperate countries. There are good examples and good strategies that people have followed that we can certainly learn from.

Rob Johnson:

And Gaurav, what do you see? You have lots of international experience, and so what are you seeing particularly in the private sector around the world? Where are people rising to the challenge that you would find inspiring?

Gaurav Dalmia:

Well I think similar stuff than what we are seeing in India, really Rob. I think businesses are holding hands together to solve a lot of problems. Businesses are not shying away from some of the challenges. I’ll tell you [inaudible 00:25:20] encourage that I saw in my own home a couple of days ago. So my wife has a apparel business, she employees about 2,000 people. And one of her things in a business is women empowerment, and that’s one of her missions. And Ann Taylor, which is an American company supports her in this, because she employees women workers. And one of her factories is an all women factory. And she’s had to retrench a lot of people.

Gaurav Dalmia:

And together with Ann Taylor she’s been working to see how they do minimal retrenchments. And she wrote a very emotional letter which she wrote in English and thereafter translated it into Hindi, she wrote a very emotional letter to her staff, saying why they need to retrench some people. And even though it was in the end a negative exercise, it came out positive. The alternative strategy would have been denial, and that denial would have led to bigger problems later on. And I think the fact that some of her customers, my wife’s company, the staff and the labor, they came together to be able to solve this problem. I thought was very, very positive.

Rob Johnson:

The question that many people are asking all around the world, is how you might call needed response to the pandemic affect our momentum in addressing the concerns of climate change. Many scientist believe that we’re on a relatively short time horizon, meaning 10 to 15 years to make profound transformation in our consumption of energy, and particularly in the production of energy, to move away from fossil fuels. There’s a feeling like, as people use the phrase, a green new deal, that there’s a need for very large and global, which you might call initiative and persistent initiative. A very, very profound transformation of the structure of production. So as the pandemic moves in, it uses a great deal of fiscal capacity, people are disrupted, probably fatigued, sometimes disoriented in relation to their employment. And people point to that and they say, this may retard or set back what was a building momentum and energy to deal with client.

Rob Johnson:

But on the other side, people are saying what was unmasked by the pandemic may open, remove some of the blockages and open the system to a more vital and coordinated and global response to climate change. I’ll start Gaurav, how do you see the challenge of climate change in light of the arrival of the pandemic?

Gaurav Dalmia:

Well every horror movie you see starts with a scientist’s advice being ignored. So the climate change horror movie is very similar. In the near term though, as a result of this pandemic, I think we may move away from the concerns of climate change, because our priorities would be slightly different. But in the longterm I actually believe we’ll come back towards climate change. So let’s look at what might happen in the near term. From a consumer behavior standpoint, from a behavior of certain governments and so on. Oil is cheap, and therefore the trade offs change. Secondly because China is a major manufacture of solar panels, of lithium ion batteries, and the trade clampdown that is happening between US and China, the supply chain constraints that may merge in China because of the pandemic. May mean there may be delays and there may be challenges in environmental related clean energy type of projects. And the Eurasia group actually I think has done a good study on what may happen to climate change issues as a result of this pandemic.

In the longer term though, I believe if you look at the trad offs of the major oil companies, with low oil a lot of the oil investments they will rethink. And they may actually divert investments towards clean energy. Therefore I think it’ll pick up quickly, the whole issue of climate change and so on and so forth. And Jayant I sent you this cartoon a couple of days ago, which I took from economist magazine, which showed the world fighting with a COVID-19 virus in a boxing ring. And outside the boxing ring, the big gorilla which is climate change is standing waiting for the next fight. So I think we will learn lessons from a fight with COVID-19, which we may use effectively for a fight with climate change.

Jayant Sinha:

No you’re exactly right. Yeah, you’re exactly right. We will learn lessons from the fight with the coronavirus. Sadly I must say that those lessons don’t inspire much confidence, because as I said right at the outside, we have not been either able to understand the magnitude of these kinds of black swan events very well, grapple with it as a global society. Know it once it is upon us, have we been able to work on it in a coordinated fashion and deal with it with the appropriate multi lateral institutions. Now that is the situation with the coronavirus, which has a very finite end, which is very tractable when it comes to medical science. Know we know as far as climate change is concerned that it is in some ways even more catastrophic and even more open ended. And because of the kind of system our climate is, that there are these open feedback loops that can result in various different aspects of that sub systems, whether it’s the Arctic or the antarctic ice.

Whether it’s ocean warming, whether it’s participation, whether it’s drought. Many of these subsystems that have these open catastrophic sort of exponential behaviors that will be almost impossible to manage and handle. And as a society we just simply don’t deal with non linearity very well, our institutions move far too slowly, there’s too many vested interests that want to block it at every step of the way, but once these systems start to spiral out of control, it becomes very, very difficult for us to deal with them. And that gives me great concern, and I really do worry about it. And you’re exactly right Gaurav that economist cartoon had climate change waiting for us. But I’m not sure that that is a randevu I’m looking forward to.

Rob Johnson:

Let’s move to, how would I say is the center piece of Inet’s mission. Gaurav you’re a member of our board and quite familiar with the agenda. But there’s a notion that’s referred to as the overton window, it is that subset of what you might call the ideas that imagination could envision, that are acceptable, that are part of the conventional wisdom. And it has been the case throughout history that periodically some disruption, to the nature of commerce or the structure of the world or related to disease have been past pandemics, or technology change like we’ve seen the massive transformation of the structure of production. As we look at these challenges, I’m curious what each of you see as a likely change in the structure of ideas. And the way I would ask the question is, when a young person is in college 20 years from now, how are they going to think differently than someone who’s been in college these last four years, about the design and the structure of the world that we should have. Gaurav, we’ll start with you.

Gaurav Dalmia:

In some ways I think Rob, we’ve become more democratized. We’ve learned about each other’s problems a little bit more. So for example, every 15 seconds a child dies of malnutrition. So this is from a 2013 study conducted globally, called make poverty history. Now this used to be far away, for most western observers it was not vivid. And all this was going on when there was enough food for everyone. I think our day to day problems we will be able to see much better because of this crisis I think. Second thing I believe is, we will believe more in governments. Governments will come out I think on average better, the cynicism people have about governments I think will change. South Korea as we know has just run a full election in the middle of this crisis. So I think that kind of thing I’m very optimistic about.

Third, I think concepts that were on the fringe. So let’s look at universal basic income. This was a fringe concept, although it started I think as a concept in the 16th century, it only came to our attention in any serious manner in the last 10 years. I think this will go far more main stream in the next 10 to 15 years. I think work from home as a concept may become more common to university graduates graduating 20 years from now, than someone graduating today. So Germany as you may have seen Rob, is passing a legislation, where employees might get a right to work from home. Just today, TCS, which is a 22 billion dollar revenue company announced that they have 450,000 people, and by 2025 they will go through a plan to see how a majority of them can work from home. So I think things like that will really change the way we conceive.

The last point I want to make, and I’m a vegetarian. And I think it was Steven Pinker who gave a talk in Davos several years ago. And he said we might think of eating meat two generations from now, and each generation being defined as 15 years, so let’s say in 30 years, the way we think of slavery today. So I would encourage people to watch this film. Rob you should see it, Jayant you should see it. It’s on Netflix called the Game Changers. It’s on veganism, and it talks about not just the health issues, but the economic issues and the moral issues related to eating meat. So I think these may be the profound changes that may happen in the next 25 years.

Rob Johnson:

Jayant, how would you augment what Gaurav has expressed?

Jayant Sinha:

Those are very insightful comments Rob. And what I will add to that is that we all have an incredible responsibility to shift the overton window over to the point where climate change becomes a very high priority for governments everywhere. And to become obviously a priority for governments, if it’s a priority for people, and we really have to thank Greta Thunberg for example, in Europe for having in some ways single handedly shifting the overton window on climate change. Certainly in Europe where now it’s become a very high priority. That’s not the case in clearly the United States, it’s clearly not the case in India. I wouldn’t know much about how China is looking at it. Certainly we know Australia is grappling with this. But it really is very incumbent upon us to build the environment, to build the thinking and the commitment among people, to make this a front and center high priority issue.

Because governments obviously react to what people require, and one of the things I do worry about is if you take air pollution in New Delhi as an example. We are living here in Delhi in the most polluted city in the world. Pollution levels are high throughout the year, but for three or four months of the year in the fall and in the winter, it’s almost unbearable. I mean you simply can’t breath the poisonous air. However, and this is really what concerns me Rob, however it’s not an election issue. And so how do we ensure that people are able to lift themselves up from the very, very sort of hear and now, very sort of narrow issues that most of them grapple with and deal with on a day to day basis? And really help them think longe term and more systemically about the world they’re going to live in and they’re children are going to live in, because particularly since I’m somebody who is an elected member of parliament, I sit in our lower house. I have 1.7 million voters in my constituency, about two and a half million people I represent.

When I talk to them, most of their interest, most of the issues that really concern them are very, very sort of nearer term, they’re not longer term at all. And they are very much concerned about how their lives are going to be tomorrow and the day after, but very few of them really think deeply about what their lives are going to be like five or ten years from now, what they’re children’s lives are going to be like. But again, as far as climate change is concerned we’ve obviously got to act now for being able to deal with the catastrophic consequences 10 years from now. So how do you build that public understanding, and how do you get people motivated to place pressure on the elected representatives to act on these issues, is something I’m not sure that we have achieved, certainly not in India.

Rob Johnson:

In the same, how do I say, spirit related to the Overton window. Ever since the Treaty of Westphalia, social designers and social analysts and social policy have focused on something they call the nation state. In recent years with technological development, technological and financial capital mobility, greater human mobility through transportation. Which you might call the integrity or clarity of what is called a nation state, has been drawn into question. People refer to the advent of globalization. And I sense as the pandemic traveled across borders, that people were seeing a bit of a contradiction. To the economist world view that fewer restrictions and more flexibility means things can be re deployed and everything can reach its comparative advantage and be better.

But epidemiologists might say, well when things are good they can diffuse through that unrestrained network, but when things are bad they need to be confined. That there needs to be compartmentalization to stop the propagation of the bad. So in this world of what we might call porous nations embedded in the globalist environment, how will the pandemic and climate affect our perception of the structure of globalization in relation to the nation state? Does the nation state have to be fortified or do we need global governance, particularly on issues like climate? I’m curious how each of you sees the future of globalization. Jayant why don’t we reverse the roles and start with you first on this one.

Jayant Sinha:

Globalization is certainly going to continue to be a very, very important aspect of all nation states, and we are going to have to find ways of making it work better for everyone. And there are many different sort of areas where there is very significant friction that is developing in the globalization paradigm that we have been following. There will have to be adjustments, I mean one very obvious thing is that if you look at how multi lateral institutions are set up, whether it’s the UN or the IMF in many cases countries like India are deeply under represented, and they are by no means a fair and balanced representation of the people or economic stature, or any other consideration. So multi lateral institutions are going to have to be deformed root and branch, that’s one very important aspect of globalization.

Second, multi lateral institutions will also have to play a much more vigilant role in dealing with some of these challenges associated with globalization as Gaurav was pointing out. The obvious example here of course is WHO and its role relative to the pandemic. So we have to not only reform the institutions, we have to make sure that they work far, far better. Then there are very serious issues around global equity Rob. Certainly when it comes to climate change for example, and you look at it in terms of the stock of emission that a developed world citizen has put up there, and previous generations have put up there into the atmosphere. And you look at what any Indian citizen is going to do. If you look at it not just from a floor perspective, which is traditionally the way the dialogue has happened, but look at it from a stock perspective, it’s obvious that there are massive, massive inequities associated with climate change.

Then there are really serious issues about capital and human floors. Migration of course is a major concern for Europe right now, certainly for India in terms of our people diaspora et cetera. So each of these as I said is a major sort of area of friction for globalization, but unless we develop strong and capable multi lateral institutions, and we agree that we will support them, we really are not going to be able to make globalization work for us. Right now it is something we can’t wish away, but frankly I don’t think it’s working very well for us right now.

Rob Johnson:

Gaurav your thoughts?

Gaurav Dalmia:

So Rob the way I am looking at globalization is simply classical. Look at it in terms of trade flows, capital flows and flow of people. So if you look at trade as percentage of GTP, that’s already peaked and it’s slowing down a little bit. I do believe it’s a bit of a pendulum, and it will shift back into high gear. I think the big problem may be in terms of short term nationalistic interest. So for example in India right now, there’s these WhatsApp messages going within all of us, in the business community and consumers in general saying please buy your product from tatacliq, which is an India owned eCommerce site. And don’t buy it from amazon or Flipcart, Flipcart by the way is owned by Walmart. So there is this kind of sentiment, saying we need to save India, we need to work for India, we’re in a pandemic, and it’s inevitable that these kinds of sentiments will surface. And I think overtime they will dissipate.

I think a longer term problem has to do with inequality, leading to pressures on people moving and migration. And I think this may be a bigger problem for Europe than for some other countries, some other continents. But I think the big challenge to globalization will be just migration of people and how it will work. Do I worry about that? I don’t really have an answer. And part of globalization today is also interlinked with the power shift between the western world and china. And I think that superimposes a whole new set of challenges that may curtail globalization from time to time. So if you just look at what’s happened in the last few weeks, China has become more aggressive in the South China Sea. China is getting a little bit more aggressive again in Hong Kong last couple of days. And how that all will play out remains to be seen.

And by the way I’ll give it back to Jayant, because Jayant actually wrote a very good op ed a couple of days ago in the economic times in India, and he called word gated globalism. So I think this word gated globalization will become terminology in the world of economics.

Rob Johnson:

Jayant your thoughts there? And I’ll try to get a copy to post on the website also, of your new op ed.

Jayant Sinha:

Thank you Rob. Gaurav is right to have said that we are going to be using trust very much as a way to think about the future. And when you apply the idea of trust to globalization, you very naturally come to this concept of gated globalization, because just like you have a gated community where there are people within the community that you trust. We are going to create these gated sort of communities within which we will trade in a free way. But outside our gated communities, we will have real distrust with our trading partners. And the question of course is how will these gated communities get created. Obviously there are a variety of free trade agreements that already exist. People are fashioning new free trade agreements. But increasingly we will see those kinds of bilateral arrangements as opposed to the classic multi lateral arrangements of the past. Again because as I was saying earlier, that the multi lateral institutions have really in some ways not succeeded. And you may be familiar with what the present Trump administration is doing with the deal for example, where they have rendered that multi lateral institution largely defunct. And started to do a series of bilateral negotiations on the trade side. So in effect, the trump administration is creating kind of a gated globalization, even as we speak. And certainly since the US sets the rules in many of these situations, we in India will have to follow. There has been some action recently for us as well and foreign direct investment, where again in this same idea of gated globalization, we have said that our FDI policies are what they are for the rest of the world, but any country that shares a geographic boarder with India will have to go through a special set of checks when it comes to foreign direct investment.

So in effect we are already in the process as we speak of creating these gated communities, and deciding whom is it that we trust, and how we want to do trade with them. And another good example of course is the pressure on the UK and other countries in Europe around 5G that the Trump administration is imposing. So we see these happening across the world, and increasingly post the pandemic where you never know who’s coming on a plane and what impact that’s going to have on you. We may even see health and health certificates as a way of genuinely setting up these kinds of gates.

Rob Johnson:

Gaurav, do you have final thoughts to share with our listeners?

Gaurav Dalmia:

Okay. So I was saying, I think in a crisis like this, heroes reveal themselves. I’ve been reading a book called 100 Great Lives, it’s written by a person called John Allen. And it covers the lives of Charles Darwin, Abraham Lincoln, Otto Von Bismarck and so on and so forth. And it’s very clear when you read these biographies, that these leaders emerged from some kind of crisis or other. Charles Darwin’s battle against the religious establishment was just intense. Abraham Lincoln’s during the civil war and so on and so forth. So I do believe crisis are an opportunity for leadership to emerge. And the last point I want to make is, I was hearing this song, actually a couple of days ago by Barbara Streisand, and it’s called Don’t Lie to Me. It’s a message to Trump by the way. And one part of that song really struck me, it says, “Everyone answers to someone”. So when we’re in positions of power and influence, we kind of forget. And times like this we realize we all answer to someone.

Rob Johnson:

Very nice. Jayant, final thoughts?

Jayant Sinha:

Very difficult for me to add anything more than what Gaurav has already laid out. But he’s exactly right, the moment will find the women, and we will certainly have people stepping forward and providing us their sterling leadership, which the world really requires just now. And we do have a number of challenges, and obviously we’ve discussed quite a few of them. But again, the human spirit, human innovation, is the force that has propelled us through history. And that is undaunted, undiminished. And certainly even through this pandemic we are seeing how people have rallied behind their leaders, they’ve rallied to ensure that fellow human beings are being supported. So the human spirit will certainly carry us through.

Rob Johnson:

Thank you both. Actually this is an audio broadcast, but I’m smiling at the moment, because I’m remembering the good fortune that I had several years ago, to be caught on a bus in a snow storm. From Zurich headed toward Davos, and sitting across from me was a gentleman and we struck up a nice conversation, and how you say made the best of five to six hours on a bus, in a ride that usually is about 90 minutes long. And that was you Gaurav. And little did I know as I was watching the snow storm, and trying to use my phone in weak wifi territory to reschedule some meetings, that I’d have the good fortune of talking with you and working with you and meeting Jayant here on this telecast. The clarity and the intelligence you both bring to bare is quite encouraging, and I want to read a pome that someone shared with me yesterday. It was written about nine years ago, but I think it’s quite germane to the conversation we had and to the current challenge.

The name of the pome is, Infect the World With Your Light. It’s by a man named Ben Ocray, who’s from Africa and it goes like this. Will you be at the harvest, among the gatherers of new fruits, then you must begin today to remake your mental and spiritual world. And join the warriors in celebrant of freedom, realizers of great dreams. You can’t remake the world without remaking yourself. Each new era begins within. It is an inward event with unsuspected possibilities for inner liberation. We could use it to turn on our inward lights. We could use it to use even the dark and negative things positively. We could use the new ear to clean our eyes, to see the world differently, and to see ourselves more clearly. Only free people can make a free world. Infect the world with your light, help fulfill the golden prophecies. Press forward the human genius. Our future is greater than our past.

Once again, thank you both for joining me today. I hope that we can convene again for another chapter on this podcast in a few months time, and reflect on where things are at that point. But this was quite illuminating today, and thank you for sharing your light.

Jayant Sinha:

Thank you Rob, and that was a beautiful pome, and I’ll just conclude by saying that it reminds me of Mahatma Gandhi’s immortal words, “Be the change you want to see.”

Rob Johnson:

Yeah.

Gaurav Dalmia:

On that note, Rob thank you once again.

Rob Johnson:

Thank you. To be continued. Bye, bye.

About the Host

ROB JOHNSON serves as President of the Institute for New Economic Thinking.

Johnson is an international investor and consultant to investment funds on issues of portfolio strategy. He recently served on the United Nations Commission of Experts on International Monetary Reform under the Chairmanship of Joseph Stiglitz.

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About the Guests

GAURAV DALMIA is the Chairman of Dalmia Group Holdings, a holding company for business and financial assets. It invests in private equity, real estate, public markets, structured debt and fixed income. He is a member of the INET Governing Board.

JAYANT SINHA is an Indian politician who is the Member of Indian Parliament and formerly the Minister of State for Finance and the Minister of State for Civil Aviation in the Government of India.