Dawood Mamoon October 14, 2004

Tags: elections , US , policy , economics

US Economic Policy not Foreign Policy

href="/tag/USA">USA: “We will reward companies that create and keep good-paying jobs right where they belong – in good old USA. We value an America that exports products, not jobs- and we believe American workers should never have to subsidize the loss of their own job.”

John F. Kerry has made ‘American Jobs’ one of the core issues in his campaign. While campaigning in North Carolina last month, a state which is most hurt by job losses, Kerry declared that he would end tax breaks for companies that outsource overseas. He has given an outline for his economic plan which is biased against the companies which are presently outsourcing or which might plan to further relocate services to foreign lands.

The ‘American jobs’ is also one of those issues where Kerry has remained steadfast in his disagreement with Mr. George Bush from the beginning of his campaign: “Because of George Bush’s wrong choices, this country is continuing to ship good jobs overseas- jobs with good wages and good benefits.” Kerry also out rightly rejects the assertion made by Bush and his aides that moving American jobs to low cost countries is a plus for US and Kerry’s ‘economic agenda’ plans to create at least 10 million jobs in America and simultaneously put an immediate hold to the recent surge in outsourcing.

Well any such stand apropos outsourcing is clearly in contrast with Indian interests because American outsourcing to India has been one of the key determinants of ‘India Shining’. Today for many American companies, India is the no.1 destination because of the maturity in its outsourcing market and its telecom infrastructure. It is estimated that over the next 15 years, 3.3 million U.S services industry jobs and $ 136 billion in wages will desert the U.S soils, whereas India would be the top priority destination for the relocation of these jobs.

Nearly every other American multinational has already set up their offices in India. Thus when an American calls to American Express, Citibank, IBM, Hewlett Packard, Dell, AOL, Delta Airlines, or Sprint’s technical support number, the chances are that he’ll be talking to an Indian. On a given day in New Delhi, Bombay and Bangalore, the thousands of new recruits join newly established call centers providing services to these multinational companies, where as these call center employees earn $ 3,000 to $ 5,000 a year in a nation where the per capita income is less than $ 500.

The future of India much depends upon outsourcing as the multi billion dollar worth of American jobs are expected to fall in the laps of Indian middle class enabling India to sustain its current growth rate of 8 percent.

Despite Kerry’s stand against outsourcing, the predominant majority of Indian Americans are still following the traditions by supporting the democrats. Here, one rationale for Indian Americans to opt for Democrats can be the traditional Republican closeness to Pakistan. Indian Americans do not like the pampering of Pakistan by George W Bush since they still seem to distrust President Musharraf despite his peace initiatives and sweet talk. The memories of Kargil are still fresh in the minds of many. The Indian lobby in America still implicates Pakistan in cross border terrorism. Though it is not clear how Kerry will deal with Pakistan, Indian Americans are expecting that he will come hard on General Musharraf on issues pertaining to terrorism and democracy by following the precedents of earlier democrats like Bill Clinton.

Well Kerry has increased his chances of success in November by winning the presidential debate on American foreign Policy where Bush already had a comparative advantage as his campaign was able to hold Kerry guilty of flip-flopping. The way Kerry conducted himself during the debate suggest that he will dominate the next two debates as well because he is already in strong position on issues like US Economy and ‘American Jobs’.

If Kerry wins he might very well come hard on Musharraf and press him to hold elections in the country. But as far as recent economic and diplomatic cooperation with Pakistan is concerned, it is unlikely to be changed since Pakistan will remain to be the front line state in ‘War on Terror’ and Kerry, during his first Presidential debate with Bush on Friday, has indicated that if anything he wants to bring the focus back to Osama bin Laden and Afghanistan from Iraq.

However, on the Indian side the current optimistic projections about its economy will have to be re-evaluated if Kerry wins because he plans to reverse the current trends of US outsourcing. It seems that the coming US elections also carry the key to India’s future.

Since Pakistan and India are talking peace, Indians should not mind Republican’s closeness to Pakistan. They should be more concerned with the economic policies of American leaders than their foreign policies. If not, there is a great chance to make a wrong choice.