Hiranmay Karlekar
The prospect of the US relenting on its proposal to drastically slash the number of H-IB visas and also stiffen the conditions for issuing them, do not seem very bright. Apart from President Donald Trump’s pre-election pronouncements, there are strong pressures from diverse quarters that believe that people arriving with these visas are taking away American jobs. The argument that, contrary to such belief, the employment of people with these visas strengthens the American economy and increases job opportunities for Americans, may be valid. But people often believe not what is valid but what they want to. The very large section of the US’ population and political establishment that believes that these visas snatch American jobs, will keep growing as long as the slow process of the American economy’s recovery from the 2008 crisis continues to cause high unemployment rates.
Hence, even if there are some concessions on these visas, these are unlikely to be such as to make the Indian Information Technology giants and techies, the principal beneficiaries, sigh with relief. Besides, even these concessions may prove ephemeral if declining – or even stationary – employment opportunities generate strong pressures for their removal. The job situation is directly linked to the state of the American economy, which is unlikely to improve significantly without some fundamental corrective measures. As Joseph Stiglitz says in his book, Free Fall: Free Markets and the Sinking of the Global Economy, “The current (US) crisis had uncovered fundamental flaws in the capitalist system, or at least the peculiar version of capitalism that emerged in the latter part of the twentieth century in the US”. It was “not just a matter of flawed individuals or specific mistakes.”
Identifying these fundamental flaws, Stiglitz states, “America’s financial markets had failed to perform their essential societal functions of managing risk, allocating capital, and mobilising savings while keeping transaction costs low. Instead they had created risk, misallocated capital, and encouraged excessive indebtedness while imposing high transaction costs. At their peak in the years before the crisis, the bloated financial markets absorbed 40 per cent of profits in the corporate sector.”
The Trump Administration’s cozy relationship with American big business has been sharply underlined by huge tax cuts it has proposed and its disastrous policies on global warming and the environment, that are supported by sections of the US’s corporate world. Despite its increasingly proverbial unpredictability, it appears most unlikely that it would take measures that would correct the “fundamental flaws” mentioned above and curb the activities of those American corporations that refuse to play by the book. The results of inaction can be disastrous.
Francis Fukuyuma, the author of the celebrated The End of History and the Last Man, writes in After the Neocons: America at the Crossroads, “establishing or reforming institutions is almost always more of a political than a technocratic problem. For example, poor fiscal management (such as Governments spending more than they take in through tax revenues or else spending public money for private purposes) continually bedevils many developing countries”.
Governmental action and/or inaction can play havoc with the developed countries as well. In the case of the US, the dismantling of the regulatory mechanism for money markets from the Reagan era prevented corrective steps being taken on time against corporate recklessness and malfeasance. This failure, in turn, followed from the belief that the market was self-correcting. As has been seen above, it is most unlikely that the Trump Administration’s policy will be any different. If anything, it is going to be more indulgent toward big business.
The US economy’s fundamental flaws would, therefore, remain and, some sporadic upturns notwithstanding, it will continue to be vulnerable to crises. The employment situation, therefore, will remain problematic despite temporary improvements at intervals. Every decline will spur demands for reducing the number of H-IB visas besides raising and numerically increasing the hurdles in the way of accessing them.
India has to learn to live with this situation and devise its policies accordingly. Besides curbs on H-1B visas, there may be tariff walls and policies to promote and protect domestic manufacture. In January, President Trump had said in his first address as the 45th US President, “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.” He had further stated, “Protection will lead go great prosperity and strength.”
The US has made it clear that it would follow President Trump’s “America First” policy and revise/scrap existing international trade agreements to advance American interests. These include the North American Free Trade Agreement, the Trans-Pacific Partnership (TPP) between 12 countries around the Pacific rim, excluding China, and the agreement being negotiated between the US and Europe, known as the Transatlantic Trade and Investment Partnership (TTIP). These are in jeopardy, as is the US-South Korea trade agreement that gives Seoul a large balance of trade surplus.
A foreign policy statement put up on the White House website as Trump delivered his first speech as President, indicated that the US will come down hard on nations that, it felt, violated trade deals and harmed “American workers in the process.” It added that President Trump will ask the US commerce secretary “to use every tool at the federal Government’s disposal to end these abuses.” All this cannot be music to Indian ears. Given the sentiments being whipped up against the H-IB visas and the employment of Indian workers, which has even led to fatal attacks on Indians in the US, it is difficult to believe that India will not be targeted.
It is not just the US. Protectionist and exclusivist sentiments have been rising in Europe. The affirmative Brexit vote is a manifestation of it. As early as 2007, the then British Prime Minister, Gordon Brown, had said that his Government would impress upon business houses that they should create “British jobs for British workers.” British workers have agitated and struck work demanding an end to the recruitment of workers from European Union countries and even a repatriation of those already in the UK. Similar demands have been raised in France and Germany among other European countries.
India needs to note all this and recalibrate its policies. It needs to focus more on its domestic market as the principal sustainer of the economy. Simultaneously, it needs to forge closer economic ties with neighbours like Bangladesh, Nepal, Sri Lanka, Myanmar and, to the extent possible, Afghanistan. It must also move closer to the BRICS countries other than itself – Brazil, Russia, China, and South Africa. The gigantic exercise involved will not be easy to complete, particularly given China’s policies and economic health. The sooner, however, the process begins the better.
