February 25, 2013

Guestworkers, Hard To Turn Off Flow: Demographics force US to confront immigration reform, but guestworkers pose challenges

Immigration reform as proposed in the United States consists of enacting policies that provide inducements and punishments to dent significantly, even eliminate, fresh inflows of undocumented, or illegal, immigrants, who are overwhelmingly unskilled, and thus reduce their  existing stock of 11 million.

There are serious reasons to doubt that amnesty will work better than in 1986, under the Immigration and Reform and Control Act, when only half of 6 million undocumented workers took advantage of that program. Proposals emerging separately from a bipartisan group of eight senators and President Barack Obama, as relayed in his State of the Union address as well as calculated leaks, suggest that a guestworker program will be included as a way of eliminating the fresh inflows of illegal immigrants. But that too will not succeed.

Proponents contend that the guestworker program will have two favorable consequences for illegal immigration: First, the guests would be “temporary,” the idea being that one could turn the program off and even return the workers to Mexico and other homelands. Yet, expectations among the workers and likely even their employers, co-workers and communities are that attachments will form and the temporary workers will tend to become permanent. Second, regardless, the political leaders assume that the guestworkers will reduce, perhaps even eliminate, the illegal inflows. Both scenarios are implausible and almost certain to fail.

The notion that a country as large as the United States, with its history of embracing immigration – “Give me your tired, your poor, your huddle masses yearning to breathe free,” as suggested by the Emma Lazarus poem near the Statue of Liberty – can keep immigrants in a temporary status and then round them up, returning them to their home countries when their terms are up, flies in the face of all experience with guestworker programs. In the German “gastarbeiter” program, the contracts were fairly specific that the workers had to leave when asked. But when it came to the crunch during a deep recession, even the fierce German authorities who go by the book resisted sending the guestworkers home. As Swiss novelist Max Frisch put it, “wir suchen arbeiter; es kamm mensch,” or “we sought workers and got men instead.”

The United States, with its historical leadership on human rights of immigrants, is even more likely to be humane. Besides, politics also would reinforce this outcome. It’s improbable that temporary Mexican or other guestworkers from Latin America in particular could be expelled without a huge uproar in the increasingly vocal and politically influential Hispanic community, and without agitating the growing number of NGOs that oppose deportations. “Monkey see, monkey do” behavior is common in American politics – what one ethnic community gets, others want and pursue also. The success of the Hispanic community in preventing deportations or enforcement of contractual termination of temporary guestworkers will likely generate pressure and political activism from other communities.

Some, including Princeton sociologist Alejandro Portes, have suggested that “self-exit” by temporary immigrants could be induced by putting some moneys, possibly related to their Social Security contributions via payroll taxes – about $1,000 per year for a minimum-wage worker in California – into a fund which would be released to the workers only on return to their country of origin. This would be regarded as a de facto incentives-linked deportation policy.

Regardless of whether temporary workers have access to permanent status, the assumption that increasing the number of legal immigrants would reduce the number of illegal immigrants seeking entry, hence solving the problem of illegal entries, is problematic.

First, immigration scholars understand that more legal entrants can paradoxically lead to more illegal entries. Legal immigrants ensure that communities, jobs and shelter are available to illegal immigrants on arrival: This reduces the risk of attempting illegal immigration.

Second, despite their dwindling numbers, labor unions, which do produce turnout for the Democratic Party, won’t approve of substantial legal entries through a guestworker program.  Recently, the Chamber of Commerce and the labor union federation AFL-CIO have pursued the notion that the numbers entering as guestworkers be determined by a committee on which the unions have a seat. Can anyone be so naïve as to doubt that the effect would be to provide the unions with a veto over entry numbers and keep them low?

If the legal inflow levels cannot be increased significantly, how could they possibly help reduce illegal inflows? The problem is that the US is such a magnet for potential immigrants from around the globe, that there will always be a significant inflow of undocumented workers unless the immigration restrictions are dismantled. Observers should not be misled by the current lull on the border at Rio Grande. The low entry rates of undocumented workers reflect the recession more than an enhanced enforcement policy. In any event, the illegal inflow consists now of an estimated 45 percent who arrive legally and stay on illegally.

The irrefutable fact is that, as long as the US has immigration restrictions and remains a preferred destination, there is no way that illegal inflows can be reduced by nibbling at insignificant increases in legal entries via guestworker programs. Just recall the movie The Untouchables: No matter whether Al Capone and how many other gangsters were removed, trucks with loads of alcoholic beverages kept crossing the border as long as Prohibition remained in place.

Rather than pretend that illegal inflows can be reduced greatly, let alone eliminated, through insignificant guestworker programs that bring in more unskilled immigrants, the reformers should improve the design of the guestworker programs. Tying guestworkers to specific employers turns them into de facto slaves, unable to assert any rights or file legitimate complaints – dangerous for them as they can be threatened by termination and hence deportation. “Close to Slavery: Guestworker Programs in the United States,” a report released this month from the Southern Poverty Law Center, details the human rights violations that afflict American guestworkers. Mobility is essential; it can be within very broad sectors, at minimum.

The programs should also be open to fair competition among citizens of foreign countries, as urged by former President John Kennedy in June 1963 when he labeled the quota system “intolerable.” The Immigration and Naturalization Act of 1965, approved after his death and supported by large majorities in the House and Senate, abolished the quota system, replacing it with caps for each country, and emphasized preferences for relatives, needed skills, and refugees. The changes ushered in a new wave of immigrants from Asia.

For now, the politicians are focusing on Hispanics for their power at the ballot box, but neglecting other ethnic communities comes only by abandoning the American value of non-discrimination.

The original article appeared in Yale Global Online.

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February 6, 2013

Futurama

The two Democratic leaders who have recently earned, for their achievements, the Nobel Prize for Peace, Jimmy Carter and Al Gore, are international icons. Carter introduced human rights into American foreign policy; Gore took up the cause of global warming. (President Obama, of course, also received a Nobel but can hardly be said to have earned it.)

The career trajectories of the two have been very different. Carter had the advantage of having been the president. Carter therefore had political success on his CV. But Gore, a man of exceptional talent, had failure on his; and that surely lit the fire under him for overarching success in some other way. So while Carter continued working for human rights, as in his bold writings on the Middle East peace process, and even went so far as to build huts for the poor in Central America, Gore chose a different career path, deciding to think and write big.

He surely succeeded beyond his wildest expectations as the author of An Inconvenient Truth. But his phenomenal success had little to do with science (which has remained somewhat controversial: many of us remember for instance the not-too-distant scare about global cooling, also from climate scientists) and much to do with the photographs of polar bears caught on drifting ice as glaciers melted. An image like that is what we all need when we push our pet agendas. Alas, none of us is so fortunate. Nor is Gore as he turns now to writing about our future.

Speculating about the future has attracted the likes of Jules Verne, whose many outlandish fantasies eventually came to life. These writers let their astonishing scientific imaginations run wild. However, there are also those who entered into profound speculations on the future progress of mankind. Would it be marked by progress or would we descend into a dystopia instead? Darwin had captivated his contemporaries in science with the theory of the “survival of the fittest,” and this had influenced deeply social philosophers such as Herbert Spencer, who remarked drily that “the ultimate result of shielding men from the effects of folly is to fill the world with fools.” He thought that society left to itself would travel down the path of progress, ushered in by successive scientific advances. But then we also had the inevitable opposing reaction, signified most eloquently by Aldous Huxley in Brave New World and George Orwell in 1984; they debunked the very idea of progress.

But the dominant approach to future gazing today is different. Many want to forecast the future with a view to corrective policy action. If lemmings are moving toward a chasm, you want to predict that they will go over the cliff if they do so; the corrective action then is to set up a diversion so they will go down a different path and will avoid the disaster. This is what Gore sought to do with An Inconvenient Truth: he identified a future where global warming, unchecked, would produce several disasters, and then he proposed remedies. It is also his main motivation for divining the future, if no action is taken, in several areas of interest to him, such as the globalization of the world economy.

The problem Gore faces in the bulk of this book therefore is that his identification of problems, and his proposed solutions, are not compelling. His erudition is considerable but is necessarily limited since he casts his net wide, and he is both unfamiliar with important issues pertinent to his analysis and also shallow in his prescriptions for remedial policies. I will illustrate with two prime examples.

He writes about Earth, Inc., or what is commonly called Globalization. Here he confines himself to “outsourcing” and “robotsourcing,” the latter being simply labor-saving technological change. He also writes about capital flows. There is scarcely any recognition that globalization involves integration of the national economy into the international economy on other dimensions such as flows of technology (i.e., patents) and on flows of humanity (legal and illegal migration) and refugees that have occupied center stage since the 1980s.

Gore’s basic mistake is to assume that both outsourcing and (labor-saving) technological change reinforce each other in putting downward pressure on our workers’ wages today. But students of globalization such as myself have argued over the past two decades that there is a plausible alternative “narrative.” That narrative contends that technological change puts downward pressure on the wages of blue-collar workers and that, with the bulk of their wages being spent on imported labor-intensive goods such as flip-flops and low-quality apparel, often produced in the developing countries, freer trade offsets (instead of reinforcing) the adverse effect of the change.

Gore again buys implicitly into the scenario where diffusion of our innovations to the developing countries such as China and India, and their decision to produce more skilled manpower, will put pressure on us because they will wind up developing expertise in producing goods where we had the advantage and therewith lowering our “terms of trade” (the prices we fetch for our exports). Yet, research by the economists Robert Feenstra and David Weinstein has shown that, while they will become more “similar” in their endowments to ours, this also means that trade in “similar products” will increase. Indeed, modern trade, and the gains from trade, occur hugely in similar products, or what is sometimes called “variety.”

The problem in this world of competition among similar products is that comparative advantage is now fragile: it has a “knife-edge” quality. One day you have it; the next day you do not. Almost every entrepreneur has a rival breathing down his neck; and this need not be from China or India, with their “low wages”—what Gore frets about—but may be Poland or France or Sweden. There are three implications.

First, firms need flexibility in firing if they are to hire.

Second, we can no longer assure economic security for workers by giving them lifetime employment. The security has to be for the worker herself, unrelated to specific occupation and employment.

Third, the volatility also means that we can no longer expect firms to provide training and hence “human capital” to blue-collar workers who can be expected to leave at the next sign of trouble at their plant or firm. We therefore have to provide this human capital through efforts by unions, employers, community colleges, etc.

Gore also accepts uncritically the notion that we are doomed to greater inequality in a globalized world of trade and multinational investment. The evidence is more mixed than he reports, based on the assertions of my colleague Joseph Stiglitz, whose conclusions are always more obvious than his arguments. The Indian evidence, for example, shows that growth has been inclusive: rapid growth, facilitated by the opening of the economy to trade and other reforms, has pulled more than 200 million of the poor above the poverty line. The well-being of marginalized groups such as untouchables and tribals has also improved. Inequality shows no clear trend either.

Given Gore’s justified reputation on climate change, a disappointing feature of Gore’s book is in the chapter titled “The Edge.” I agree with him that the evidence on climate change, and the contribution to it by man-made carbon emissions, is about as good as science can provide; and he is persuasive in his sketch of the scenario of the dangers that global warming, unchecked, hold for mankind. Where he fails is in the remedies that he discusses. To focus on just one issue: there is now agreement from the last meeting at Cancún on the attempted renewal of Kyoto Protocol that $100 billion be found annually to create new technologies of mitigation and adaptation to climate change. It is expected that a significant share of this will be public funds. We have the precedent that public monies should largely be used to create public good: thus the new seeds under the green revolution were publicly financed and they were available to everyone virtually for free. Should we then not expect the green technologies developed with public funds to be available for free to Mars, China, and India?

But, to my knowledge, Gore has not embraced this proposal, which would make, say, India accept more ambitious targets of carbon reduction because it would reduce the cost of doing so. I would not make the ferocious charges that Gore levels at the opponents of climate change (see page 283). But may I wonder whether the reason for Gore’s omission is that he is heavily invested in green-energy stocks and would like to see public funds to be used only for private payoffs by these firms?

The good in the book is therefore offset by the bad. But even the bad will produce good if it irritates us into thinking harder about the many issues that Gore correctly insists we must confront.

The original review appeared in The Daily Beast

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February 1, 2013

How to help feminism

The horrifying tragedy that befell the young Indian woman Jyoti Singh, who was brutally gang raped in a New Delhi bus in December, and later died in a Singapore hospital, has led to spontaneous outrage. That Indian women face terrifying risk when they venture into public spaces, as they must do in cities and towns and will do even in villages, is a fact that few had appreciated earlier; this is no longer so.

Nor must one discount the fact that the somnolent, indifferent and at times hostile Indian political leadership in New Delhi has been forced into awareness and action. One would have thought that Sonia Gandhi, a woman totally in charge of the Congress party (India has astonishingly backed into the old Soviet model, where the party chairman is the real boss and the prime minister has no real power) would make an immediate address to the nation, much as President Barack Obama did with passion and tears after the shocking slaughter of young children in Newtown, Connecticut. As a female leader, she should not have taken almost two weeks to speak to the women of India. She needs to abandon the “culture of silence” which she has long embraced.

But the reactions have varied greatly—much like the diverse perceptions of an incident filmed in Rashomon by Akira Kurosawa, from short stories by Ryunosuke Akutagawa. They range from thoughtless calls for drastic punishment for rape to expressions of sentiments by men that betray the deeply offensive cultural attitudes of even educated and “liberal” men towards women, which must be confronted.

Perhaps the most widely shared reaction, inevitable in such cases not just in India but everywhere, was that draconian punishment was in order. Many seeking revenge or believing that deterrence increases with the magnitude of punishment reacted by demanding capital punishment for the accused in this and future rapes. Capital punishment has, however, become rare; and even in India, liberal opinion has swung increasingly to endorsement of the celebrated dissent in 1982 against capital punishment by former chief justice Prafullachandra Bhagwati (transparency requires me to disclose that he is my brother).

True, it is hard for politicians to take this enlightened position. Michael Dukakis, a US presidential candidate in 1988, fell a victim to his anti-capital punishment views when asked in a televised debate whether he would oppose capital punishment even if his wife was raped and murdered. He should have said, which he did not, that though he might have wanted to wring the neck of the rapist with his bare hands, a civilised state cannot do this.

Some have even suggested public hanging which would take us back to the medieval displays that we have fortunately banished from civilised societies. Others have demanded castration. That is a mutilation that modern societies cannot accept though unfortunately some countries such as Saudi Arabia continue even today to indulge barbarian practices and will cut off the hands and feet of thieves.

But if these demands, expressed in the heat of the moment, are to be rejected, India can certainly profit from enhanced enforcement and forensic advances. Assaulted women must be assisted by female police officers whose numbers are woefully small and must be greatly augmented. DNA samples must be collected.

Instead of cases dragging on for years, fast-track courts must be set up for rape cases, though the fast track must nonetheless not be so rushed that the police and prosecutors are under pressure to get convictions and will therefore fabricate evidence and force confessions that lead to unjust convictions. Remember the case of the Central Park jogger in New York, who was assaulted and raped on 19th April 1989, where the pressure on the police to find and convict the culprits, driven by public outrage, led to five teenagers from Harlem being convicted on the basis of false confessions obtained after lengthy interrogations. Later in 2002, these convictions were set aside when a rapist already serving a life sentence for murder confessed to the crime.

I hope that cooler heads will prevail on these rape-related issues of prevention and redress. But the attitude of men who reacted adversely to the female protestors, and also of the victim who told her mother “I am sorry” as she lay dying, reveal a culture that lets men indulge sexism and encourages women to assume guilt for prejudice directed at them. This wider focus is equally important if India is to reduce, if not eradicate, the widespread phenomenon of gender inequality.

Thus, a Congress member of parliament Abhijit Mukherjee, who is the son of the current president of India, described the protesting young women as “dented and painted”—a comment he later retracted—implying that they were dolled-up prostitutes and also damaged goods. This reminded me of the time many years ago when I was on a panel at the Indian Planning Commission with a high-level bureaucrat who remarked that scarce foreign exchange should not be spent on importing lipstick. So, instead of demolishing his argument on economic grounds, I responded: “I must tell the women in the audience that, even as my fellow panelist says that foreign exchange should not be wasted on lipstick, I can smell the Brylcreem in his hair!” What is sauce for the goose should be sauce for the gander—but then men would have to treat women as equals.

These attitudes are carried by men into employment practices in India, where women are often passed over in favour of less accomplished men. As it happens, in American universities which offer tenured posts, I often go out of my way in appointment committees to say that women are handicapped, in a way that should be taken into account, because the tenure decision comes up far too soon when they are often having babies and cannot do as much research as men.

But the attitude of women, in India and elsewhere, to accept blame without a semblance of justified guilt, also needs a corrective. I remember two teenage nieces telling my wife that she was responsible for my success: that behind every successful man was a woman. They thought they were being feminists. But they were not. They should have turned this around and said: in front of every woman is a successful man blocking her way!

Women really have to be careful to assert their rights. Sometimes they promote the wrong role models by taking the easy way out, piggybacking on successful men and sacrificing their autonomy. Can we really condone, for example, a woman who abandons her career and buries herself instead in her husband’s career, or a woman who becomes the director of a university programme which she is not qualified for but is part of her father’s fiefdom? The men are surely to blame; but equally so are the women, who should know better.

We know enough today about how gender discrimination is not just bad in itself but also deprives us of the benefits from engaging half of humanity into gainful employment—often the better half. Once, I was in Finland as a member of a UN Group of Eminent Persons and President Tarja Halonen had supplied each of us with the services of a foreign service officer. When I asked the president why all of them were women, she said that women candidates were so successful that they had to introduce an affirmative action programme to bring some men into the foreign service. My amused reaction was that this showed why we men had to suppress women to date: we simply could not compete with them on equal terms.

If the tragic rape case finally focuses our attention on the wider cultural factors in India and the ways in which they insidiously undermine the quest for gender equality and fulsome respect for women, the young victim’s death will have served a larger purpose.

The original article appeared in Prospect.

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December 20, 2012

Blame Bangladesh, Not the Brands

The community was in a “palpable state of shock” over the fire at a plant that left 25 workers dead and 55 others injured. “Many people who lost loved ones and friends in the fire expressed bitterness about the deaths and injuries. They acknowledged that the plant provided significant employment for residents in the area, but they were deeply concerned by reports that many of the victims of the blaze were trapped in the building by blocked exits.”

Was this a report from Bangladesh or Karachi? No, it was from a poultry processing plant in Hamlet, N.C., described in The New York Times as an “All-American City” in 1991. Blame for that fire was cast not just on the company, but on the government.

The Bangladesh fires emphasize again a lax and lackadaisical attitude to the issue of workplace safety by the Bangladeshi authorities, possibly aided and abetted by domestic politics. This reflects a general attitude of neglect in protecting workers against unsafe conditions, like providing goggles and ensuring that they are worn when workers operate close to an open furnace.

But asking Wal-Mart, Gap and other brands to substitute for the somnolent government will only marginally address worker safety reform. What is necessary is for the Bangladeshi government to stop resting on its laurels of social progress — a myth, which I and the economist Arvind Panagariya have recently challenged, and step up to the plate to establish proper regulations and monitoring, extending to all of Bangladesh, not just its garment factories.

The original article appeared on NYTimes.com.

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October 16, 2012

Untenable critiques sowing confusion on supposed ill-effects of retail FDI

Retail sector liberalisation has been revived and included in Prime Minister Manmohan Singh’s package of big-bang reforms announced recently. This was to be expected as an element of the package since the influential minister Jairam Ramesh, who has access to Sonia Gandhi and is identified with her NGO-dominated set of advisers whose knowledge of economics is outweighed by their enthusiasm, had already announced his conversion to retail sector liberalisation.

As expected, Mamta Banerjee has withdrawn her support to the UPA government over the issue. Equally, opposition parties, chiefly the BJP, have opposed the move. Interestingly, the BJP opposition, as that of advisers to Nitish Kumar, is nuanced. Their argument is that this is a high-risk strategy and that the Prime Minister could have chosen other ‘surer’ reforms, with a higher payoff-to-risks ratio, as part of his package: e.g., further trade liberalisation as we still have ways to go in that regard, and trade liberalisation since the early 1990s has been a great success.

We would argue that this argument is implausible. The economic gains from retail sector liberalisation are considerable indeed, as has been argued in many studies. Also, as we argue below, the liberalisation of the retail sector offers little risk: the risk to the small shopkeepers – the so-called mom-and-pop shops, a cultural misnomer since, in India, the old moms and pops are not seen in these small shops as much as middle-aged and younger family members – is limited.

Besides, we should have learnt by now that forgoing economic gains just because you are afraid of a possible downside is the wrong way to plan. Instead, we should embrace these gains and have a machinery set up to assist the small shopkeepers if and when they succumb to, instead of profiting from, the influx of the multi-brand retailers.

What is surprising, however, is that some economists have also expressed opposition to the proposed retail liberalisation. Chief among them are the economists Raghabendra Jha (who works in Australia) and Raghav Gaiha (who teaches management in Delhi University). Their recent arguments in ET that “not only will multi-brand retail FDI hurt kiranas, infrastructure and farmers too won’t gain” ( Wholesale Gaps in Retail FDI, October 4, 2012) are readily refuted.

Thus, they claim incorrectly that there is no evidence showing that FDI in multi-brand retailing will not affect the growth of kirana, i.e., small stores. In a forthcoming but long-available paper written in the Program on Indian Economic Policies at Columbia University in April 2011 – a shorter version based on it is in our article, Selling The Wrong Idea, Times of India, December 12, 2011 – we used the results of a time-series model to predict that retail sales can continue to grow at the post-2005 rates in the short run, and that unorganised (read: small) retailers should capture three-quarters of a projected $138 billion increase in real retail sales during 2009-16. The entry of multinational retailers may lower the sales increase for unorganised retailers, but it will not reverse their growth in the near future.

Second, we are free to learn from experience in other countries. In particular, we can draw on the Japanese experience where the mom-and-pop scare was raised when the US used gaiatsu (foreign pressure) to virtually eliminate restrictions on the expansion of large retail sector stores. Japanese experience, which we and others have studied, show that little of this happened. By contrast, Messrs Jha and Gaiha offer little more than assertions in embracing the usual fears of damage to the small shops.

Third, Jha and Gaiha claim there is no evidence to suggest that farmers will earn higher prices after the entry of multinational retailers. Instead, they expect these firms to act as monopsonies. Our research indicates that Indian farmers typically earn a third – instead of the international norm of two-thirds – of the final price of their produce because of greater waste and less efficient distribution, and because wholesalers operate as exclusive buyers by the state APMC Acts.

One aim of the required investments in storage and warehousing by multinational retailers is to reduce waste and improve supply-chain efficiency. Contrary to the claim that multinational retailers will become monopsonies, we have argued in our research that farmers should to able to sell to multiple (domestic and multinational) organised retailers as well as the existing wholesalers supplying unorganised retailers.

Fourth, Jha and Gaiha claim that there is no evidence to suggest that multinational retailers may create eight million jobs. We believe this claim is correct but misleading. While the figure has been attributed to an executive in a news story, we are unaware of any policymakers or researchers who have made such claims, which in any event make no sense in the absence of a time frame or knowledge about the entrants and their strategies.

Thus, Jha and Gaiha fail to make a case against retail sector liberalisation. In particular, their assertion that the measure has been adopted without serious argumentation and research cannot be sustained. It is a red herring.

The original article appeared in the Economic Times.

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October 2, 2012

A time for gaffes

I was reminded of Edna O’Brien’s novel, August is a Wicked Month, when two scandals erupted last month – one, predictably, in the financial sector and the other, more surprisingly, in the journalistic sector.

BBC News (August 10) and Reuters (August 7) gave wide circulation to the scandal over the fixing of the London Interbank Offered Rate (LIBOR), that underpins the nearly $350 trillion market in derivatives. While this lapse was not on the moral scale of Bernie Madoff’s classic rip-off of his clients, it did create waves of indignation and attendant condemnation simply because far too many financial firms and regulators had their hands dirtied.

It also reminded many of the time that Lloyd Blankfein of Goldman Sachs tried to laugh off his firm’s lapses by saying that his firm was “doing God’s work”. Perhaps the only way for him to have defended himself against the hostile merriment he provoked from American comedians such as Jon Stewart would have been to say that he had in mind the holy trinity of Indian mythology where Brahma was the creator, Vishnu the preserver and Shiva the destroyer, and that he was thinking of Shiva!

Then, in mid-August, journalism was rocked by the charge of plagiarism against prominent journalist Fareed Zakaria of CNN and Time. The scandal has now died down, as with the plagiarism of the distinguished historian Doris Kearns Goodwin earlier. But it cannot be entirely wiped away, and it has left many asking questions concerning journalistic ethics that will certainly be examined more fully by schools of journalism.

But after August, the Americans have opened the season on gaffes – by both Republican presidential candidate Mitt Romney and President Barack Obama as the election reaches the final lap of an excruciating marathon. Gaffes are, of course, a regular feature of political life, and they multiply as politicians navigate the rapids of the election season. Thus, we remember, Joe Biden’s foolishly borrowing entire episodes from British politician Neil Kinnock. But the more famous one has to be Sarah Palin’s gaffe, as senator John McCain’s vice-presidential candidate, about being able to handle Russia because she could see it across the border from her home!

But US presidential candidate in 2004, John Kerry, topped them all when he said back then that firms that were outsourcing were Benedict Arnold’s. At first, i thought he must be complimenting these firms because i had never heard of Benedict Arnold and thought he must be an obscure English poet, a distant cousin of Matthew Arnold. Lo and behold: i soon discovered that Benedict Arnold was America’s greatest traitor!

He sounded like Lou Dobbs, the great scourge of outsourcers whose CNN show broadcast internationally was a farrago of attacks on the greed of corporations that outsourced. He is now gone, but President Obama has more than made up for Dobbs’s absence, so far with no price having to be paid for this lapse.

In fact, the president has been let off for many gaffes that no one else would have been forgiven. Buried from view have been his gaffes in pronouncing foreign names, often during state visits abroad and at home, which far exceed the tendency of American politicians in pronouncing foreign names; one shudders when even today, Iraq is pronounced as Airac.

When i spoke at the Indian Parliament a few days after he had, i was told that he had continued manhandling Indian names, as he had done earlier in Washington (where he also called Prime Minister Nehru, President Nehru once) and in Mumbai. A Japanese diplomat told me that he did the same with Japanese names.

By letting him off scot-free, the media does not serve him well. If not the serious media, the comedians should provide the corrective. For, these gaffes suggest an inherent lack of seriousness about international issues that, if left to fester, may well come to haunt the US and its friends and foes.

The original article appeared in Times of India.

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August 30, 2012

Unpublished riposte to Harold Evans

The distinguished journalist Harold Evans directs his reptilian fury at the Financial Times (August 27th) for a lapse from its “high standards in publishing my “venomous” column on Mr. Zakaria’s plagiarism. He hisses loudly but he fails to bite.

He forgets the elementary fact that Mr. Zakaria had confessed to plagiarism. No, there was no third degree applied by rogue cops. None of what Mr. Evans writes about who wrote what and retracted what charges they had made on the issue — his assertion that I could not have known all this is somewhat ludicrous — has any bearing on the fact that Mr. Zakaria was a self-confessed plagiarist.

The only questions were what penalty could and should follow. Since Mr. Zakaria was a journalist as also a man feted by universities with honorary degrees and even sitting as a member of the Yale Board of Trustees, the two issues had to be separated.

The penalties at universities are fairly severe, as I explained. If Mr. Evans doubts that, he should look up what is said on the subject by the University of Durham which he attended. The issue for universities then is clear: should they expect less from the people they honour and more from those whom they teach? I think this matter of equity is so important at universities that self-confessed plagiarists of high profile must be reprimanded, and even honours may possibly be withdrawn, unless our students become cynical about plagiarism.

As for journalism, which I do know something about as having been a founder of the influential Media specialization in the School of Public Affairs at Columbia (the role model for the changes made at our School of Journalism) and having taught with Sylvia Nasar at the School of Journalism, I am astonished by the lackadaisical approach taken by Mr. Evans to the question of standards in journalism.

He is also offended that I talk of “over-commitment” by Mr. Zakaria, a generous attempt to explain how his lapse could have occurred. He writes at the same time of exoneration by investigation by CNN and Time, of “thousands” of Mr. Zakaria’s columns (in an internal, not impartial third-party investigation that no one could take as compelling since these institutions’ profit motive would conflict with their principles.) I might ask: how many thousands? Mr. Evans might as well have written: hundreds of thousands!

Does Mr. Evans seriously believe that, with 24 hours in the day, Mr. Zakaria wrote “thousands” of columns, book reviews and his fine books, ran the GSP talk show, did specials on different issues and gave commencement speeches, and was not “over-committed”? Is he Superman?

More likely, he is a friend of Mr. Evans who shows a strange lapse of professional standards when he fails to mention that he is married to the celebrated Tina Brown who now runs the Daily Beast and Newsweek whose international edition was long edited by Mr. Zakaria. Has Mr. Evans heard of conflict of interest and the need for transparency? The Japanese have a tradition where, if a samurai commits harakiri by disemboweling himself, his best friend or chosen attendant will put him out of his agony by doing a kaishaku: cutting his head off. Mr. Evans instead tries to circle the wagons around his friend with absurd allegations of my indulging in the “full Nuremberg”. Mr. Evans must know that this is obnoxious and his abuse of his status in British journalism makes his behavior contemptible.

Jagdish Bhagwati

University Professor of Economics, Law & International Affairs, Columbia University

Senior Fellow in International Economics at the Council on Foreign Relations

 

 

 

 

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August 21, 2012

Trading in Hate

The massacre in Norway in July 2011 and the recent attack on a Sikh temple in Oak Creek, Wisconsin, were the work of right-wing extremists who sought to remake the world in their neo-Nazi image. Likewise, the terrorist attacks of September 11, 2001, were the work of Islamist extremists who view other religions and cultures as a threat. But it would be simplistic to believe that our leaders do not add fuel to the fire of hatred, even if their chauvinism takes a more “civilized” form.

Just ask the Japanese, who were continually denounced in the 1980’s as wicked traders. Or consider how the unceasing refrain against outsourcing nowadays has demonized India.

This is not new. Japan’s heavy burden of atrocities during World War II effectively erased from America’s popular memory the Immigration Act of 1924 and other federal legislation aimed at excluding the Japanese and the Chinese from the United States, as well as racist state legislation, such as California’s 1913 Alien Land Act. With the war’s outbreak, Americans of Japanese origin were expropriated and herded into concentration camps. California Attorney General Earl Warren championed the measures – the same Earl Warren, who, a decade later, as Chief Justice of the US Supreme Court, would oversee the rejection of the separate-but-equal doctrine at the heart of America’s segregation of its black citizens.

The anti-Japanese hysteria of the 1980’s fell on fertile ground. Many in the US feared that, just as the nineteenth century had been British and the twentieth century had been American, the twenty-first century would be Japanese. But, unlike the British or the Americans, the Japanese allegedly were gaining ground in nefarious ways, exporting aggressively to the US and unfairly excluding US exports from their domestic market.

Virtually every Japanese policy was interpreted in the worst possible light. The propaganda was bipartisan in the US, and, with few noteworthy exceptions, was widely disseminated by the country’s uncritical and pseudo-patriotic media. I recall the Nobel laureate Paul Samuelson – alongside John Maynard Keynes, arguably the greatest economist of his time – remarking that anti-Japanese propaganda had gone so far that Japan’s critics would argue that the Japanese bow in greeting Westerners to make it easier to cut them off at the knees.

The effect, particularly given a long history of anti-Japanese sentiment, was a predictable wave of racist violence, including the destruction of Japanese cars. The beating death of Vincent Chin, a Chinese-American who was mistaken for a Japanese, also resonated historically, recalling a pseudo-scientific article on how to distinguish the Chinese from the Japanese that Life magazine published in December 1941.

The Indian situation in the US today is different; there is no baggage of unpleasant memories on which prejudice and violence can draw. Yet, like a desert cactus, hate can thrive on very little.

Unfortunately, US President Barack Obama’s administration has continually harped on outsourcing to India as a cause of American job losses. Similarly, Senator Charles Schumer of New York has indulged in Japan-bashing, China-bashing, and India-bashing – a singular record of truculence and economic illiteracy – while Senator Barbara Boxer of California attacked her most recent electoral opponent, Carly Fiorina, for eliminating 30,000 jobs at Hewlett Packard during her stewardship of the company. In fact, in a highly competitive world, Hewlett-Packard managed to save 150,000 jobs by sacrificing those 30,000.

In the current presidential election campaign, the Democratic Party is attacking Obama’s Republican challenger, Mitt Romney, on the same specious grounds, with a complacent media acquiescing in the Democrats’ de facto India-baiting.

The net result has been to fuel resentment against India that spills over into occasional violence. Groups calling themselves “dot-busters” have attacked Indian women. When I have written in favor of freer trade and liberal immigration, I have been denounced as a “curry nigger.”

Nor has the Obama administration helped matters by shifting the blame for the failure of the Doha Round of multilateral trade negotiations onto India. Outside the US, it is well known that Obama himself pulled the plug on Doha. The notion that “we are open and others are closed,” a cherished belief of US politicians and media – and an article of faith with the current administration – also feeds the notion that countries like India are wicked traders, much like the Japanese in the 1980’s.

Much of the world expected more elevated behavior from Obama. Unfortunately, it has gotten a much lower standard than it anticipated.

The original article appeared on Project Syndicate.

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August 16, 2012

Plagiarism is more than an academic matter

Plagiarism is in the news. Fareed Zakaria, Time Magazine columnist and CNN television show host, was perhaps a predictable victim of overcommitment: there are only 24 hours in a day. It appears he overreached as he sought to grasp multiple topics outside his usual field, foreign policy. Plagiarism seemed to be an easy solution to the impossible demands on his time, as he tried to maintain “pundit” status.

His misfortune was to pilfer from Jill Lepore, a Harvard professor and a staff writer for The New Yorker, a magazine that all intellectuals read. The plagiarism was caught, however, not by the magazine (for intellectuals do not read Time, not even at the dentist) but by a blogger of little distinction.

How could such a lapse happen? Could Mr Zakaria not have called up Ms Lepore and discussed her views at first hand, as he used to do regularly with me?

The punishment will probably be to banish him from journalism, even though the profit motive is clearly prompting CNN and Time to test the waters by starting only with a “suspension”. Mr Zakaria is probably a cash cow for them. The Indian government will be under pressure to withdraw the prestigious Padma Bhushan award that was conferred on him as a distinguished Indian journalist. It is also certain that prestigious schools of journalism, such as the one at Columbia University (where I teach), will have no alternative but to keep plagiarists at a distance and condemn them.

But the unfortunate Zakaria case also raises the question of plagiarism in higher education. Universities have become victims of plagiarism by students in an age when there is free access to information and assignments can be written by simply copying huge chunks of text, even entire essays, from the internet.

Once difficult to perpetrate, plagiarism is now so easy that a university such as Columbia will explicitly warn incoming students of the dire consequences, such as expulsion, if a student is caught. In addition, we warn students that, if they steal from others, there is software that can unmask them. I can feed a paragraph, even a few sentences, into the computer and lo and behold it will tell you who wrote much the same thing earlier. I know of many instances where plagiarism has been exposed in this way.

But universities can do more to stamp out plagiarism. For example, since essays are the natural medium for plagiarism, a remedy that I find useful is to ensure that a fraction of the grade depends on multiple-choice examinations where one cannot steal or copy. This would not merely insulate a significant fraction of the grade from plagiarism. It would also suggest that, if a student fails the multiple choice but scores highly on the essay, the latter needs to be examined for plagiarism.

Universities should also ensure that big fish such as Mr Zakaria who are caught plagiarising are firmly dealt with: letting them off with a soft rap on the knuckles can only breed cynicism among students who are exhorted not to plagiarise. Withdrawal of honorary degrees and expulsion from boards of trustees are among the punishments that should be automatic once plagiarism has been acknowledged.

But the issue of plagiarism is not confined to students facing the pressures of examination and competitive performance. It has spread to faculty members where charges of plagiarism, sometimes far-fetched, sometimes accurate, have proliferated, reflecting the pressures of a “publish-or-perish” culture.

The pressures that can fuel plagiarism by the “superstars” in academia, however, are different, perhaps similar to those that felled Mr Zakaria. The need to write something that “catches the public eye” has for many become an obsession. The media is a playground for achieving celebrity academic status, which is pleasurable in itself but also leads to large lecturing fees. And so it leads to borrowing ideas without attribution.

I noticed it when a distinguished economist happened to take a concept of mine that I had written about many times. They used the idea in an article, without attribution. In that instance, I am happy to believe that it was an unwitting omission. But it illustrates what academics have to guard against with zealous scrupulousness. It can surely be done.

The original article appeared in Financial Times.

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July 24, 2012

Doha’s Retreat

Germans would be interested to know that Chancellor Angela Merkel teamed up in 2010 with British Prime Minister David Cameron (and, in turn, both brought on board the President of Indonesia and the Prime Minister of Turkey) to appoint an Independent Expert Group, co-chaired by me and former WTO Director General and EU Trade Commissioner Peter Sutherland, to help bring the Doha Round of Multilateral Trade Negotiations (MTN) to a close after nearly ten years of negotiations. She even turned up at Davos where we presented our Report and spoke emphatically in support of Doha, as did Mr. Cameron.

The joker in the pack, who was the kill joy rather than a source of merriment and support, was the United States. When I said that it was disappointing that President Obama had even omitted mentioning Doha in the State of the Union address, and that one could only hope that this was because he did not wish to mention a four-letter word to bring civility into American political discourse, many in the audience laughed, but not Senator John Kerry! In fact, the United States under the Obama Administration, already under siege from the labour unions who were hostile to trade, was resolutely opposed to closing the Doha Round unless numerous concessions were made to appease its business lobbies.

Thus, Obama administration wanted Doha Heavy: several demands for more concessions by others, especially the major developing countries, including new concessions in services, were to be negotiated. This meant, of course, that the conclusion of Doha would be put off by some years: Doha would then be dead for all practical purposes. So, many preferred to opt for Doha Lite: add a few concessions by the US and India on agriculture (which had earlier been a sticking point: the US concessions were inadequate and the Indian demands for special Safeguards were excessive), some minor concessions in manufactures that would appease difficult Congressmen in the US, and close the Round. The long laundry list of concessions demanded but not negotiated would then be handled by declaring a new Round of “unfinished agenda” just as the Doha Round could be seen as one, tantalizingly an Obama Round, addressing the “unfinished agenda” of the Uruguay Round. But this was roundly rejected by the US.

In the end, Pascal Lamy, the Director General of WTO and a Frenchman who is a freak phenomenon in being a socialist and a free trader, made a pitch to settle for just a few concessions for the 49 Least Developed Countries (LDCs). I called this Doha Lite and Decaffeinated, meaning just coloured water! A principal item here was the extension of one-way duty-free access to the LDCs. But the Europeans had already made this concession through the Everything But Arms initiative: and this was before the Doha Round was announced, so could not be counted as one of Doha concessions! So, the real concession was to be made by the US as part of the Doha Round. But the US insisted that even that concession would not be made except as part of Doha Heavy.

In short, the US killed Doha. Or at least put into Intensive Care. The WTO Ministerial in November 2011 ended without concluding Doha, in defiance of all the efforts that leading scholars and statesmen worldwide had been making in its behalf. The astonishing thing is that Doha was a multilateral-liberalization initiative; and ironically, it was killed by President Obama who had ironically been awarded the Nobel Peace Prize by Norway in the expectation that he would promote multilateralism and turn his back on US unilateralism!

There has been an attempt at preventing the finger being pointed at the US for this enormous setback. When Doha failed to be settled at the Cancun meeting of the WTO in 1993, Robert Zoellick, the US Trade Representative at the time, and even Lamy as the EU Trade Commissioner, did not hesitate to blame the developing countries who had refused to go along with inadequate concessions on agriculture. But who will point a finger at the US? One does not bark at a Rottweiler!

Yet, failure to do so means that the turning of what my great teacher Charles Kindleberger called an “altruistic hegemon” who provided a public good to the world, into what I have called a “selfish hegemon” which uses its pre-eminence to undermine a public good like the multilateral world trading system, will have passed without the public condemnation that alone can force it into better behavior.

Where does that leave us, however? There is great complacency that the fall of Doha is no cause for lament and that the WTO as the apex institution for trade will survive intact. It is as if loss of faith in Catholicism will not affect the Vatican. Doha has three legs: multilateral liberalization; framing of trading rules; and the Dispute Settlement Mechanism. The first is now broken. In turn, it cannot but break the other two.

With multilateral trade liberalization now almost abandoned, the world is now left exclusively to bilateral and “regional” Preferential Trade Agreements (PTAs). These were proliferating even earlier, creating a hugely chaotic pattern of preferences that I have called a “spaghetti bowl”. These were deplorable and the discrimination that they were founded on would have turned in their grave the grand multilateralists from the time of US Secretary Cordell Hull, who won the Nobel Peace Prize (among other things) for promoting multilateral free trade.

And now, the US, not content with killing Doha, is even promoting the regional PTA called the Trans-Pacific Partnership, compounding its folly twice over.

In the absence of MTNs like Doha, these PTAs will also become the arrangements where rules such as anti-dumping and subsidies codes will be set and will then be muscled into WTO at Geneva. Similarly, the Dispute Settlement Mechanism at the WTO, a proud achievement in 1995, will also be in danger of falling into disuse as bilateral and regional dispute settlement arrangements will take over: and where the hegemons will expect that this asymmetric power will get them more favourable adjudication. None of this is cause for celebration; rather it calls for lamentation.

But I cannot conclude without commenting on the different but related issue of Protectionism which relates, not to moving forward with liberalization but with preventing a falling back. When the crisis broke out almost four years ago, all trade scholars noted that the WTO had played a role in containing protectionism: it provided institutional obstacles to raising trade barriers freely unlike in the post-1929-Crash 1930s when no such institutional constraints were present. So had the role of ideas: few believed now that macroeconomic crises could be resolved by raising trade barriers. Structural changes also meant that retaliation was now easier and more likely.

The continuing crisis, and the destructive US undermining of Doha and hence of the WTO, have combined to make Protectionism now a more potent threat. The recent G20 meeting hardly focused on these threats, unlike in earlier meetings like the one in London with Prime Minister Gordon Brown presiding. Whether this is from indifference or complacency, it bodes ill for the world trading system.

The original article appeared in Handelsblatt.

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