Flipkart, Ola & Government Protection: An Alternate view
Tarun Davda

Now heres my Take on Tarun Davda article,

1. Quoting WTO as against Anti — Dumping does not account for just right or wrong. Why I say so because there are a lot of rules that operate in Grey today than just Black and White. Be it WTO, World Bank or American foreign policy they itself had designed and created an architecture that favored American Geo-political situation, Foreign policy , and Trade by tweaking trade agreements for US corporations globally across various parameters of business, policy, capital, immigration and supply chain , So to start with it was never a level playing field.

2. We cry Anti — Dumping Now ? Anti — Dumping for sure is not a free market economy practice that’s true , but Dumping practices occur in various forms and not just Capital . Some have impact and macro level and some more at Mico level.

a. Capital — US Corporations

b. Labour for Products — China

c. Labor for Services — India

Now when US Corporations have been Dumping Capital which to an alternate observer looks like a Simple BCG matrix — where-in I take my Cash Rich Cash cow markets to fund future stars in other geographies we cry foul. I would take this argument however if we our selves didn’t assert that principle , i.e

Dumping Labour for Products — China

This has been a practice for chine since 2–3 decades when Non market economy principles were given exceptions and china was allowed to trade and export its Products to US, it was agreed on WTO terms. The premise that US imagined was to give an export lever to china to US consumers and in turn US gets access to 1.3 billion people Chinese to sell their products.

What happened was quite the opposite than what was NAFTA drafted for , China playing its own cards created an Anti-Competetive market for goods which none other nation could produce.

This made US manufacturing practically dead. Robbing US of jobs , manufacturing and innovation now. It made china at Mico level create jobs at a far cheaper rate than US. Without strict labour reforms , poor environment regulations the cost of production in China which included direct costs , i.e Labour + Insurance + Environment costs were so low or non — existant that it made US corporations practically un — competitive on Pricing front. After all labour norms and environment norms and incl minimum wage act laws in US made it harder for them to compete. This technically changed the game for china.

Besides poor Intellectual Property laws and copy cat products actually made china a manufacturing power house of the world.

To Add additional fire power Chinese trade policy didn’t stop there , they further de-valued RMB their currency to make their products even cheaper in terms of real value dollars and export costs.

To Kick in final straw chinese corporations had communist govt support and capital access to fund , conquer and tip US business rules , buy US corporations and alter their power architecture.

Labor for Services — India:

India Itself after missing the manufacturing bus in 1991 moved to an open economy that created services industry like none other for IT and ITES engineers were trained to provide cheap access to white collar labour to US IT and ITES corporations. It seemed to create win-win for American business , consumer and Indian Labour markets. The issue however is as follows –

1. American consumers are also American workforce that is now under employed or un employed as jobs moved to india and rest of Asia. The impact of lowered Disposable income has hit US in long run.

2. India on the other hand has benefited . But India still lacks the chinese muscle and does not have Unified and cohesive Geo-political and Trade persuasion and ideology like china.

3. Indian skilled labour in 2001 was 1/12th the cost of American worker though it Is close to 1/4th or 1/5th.

Bottom line , The market economy operates in an ideal world , but rather world is not perfect. To every rule , law , agreement there is a contradiction and corporation . Yes today it’s a tightly linked and integrated world but it is any thing else but not Free market economy.

We are seeing De-globalization, Protectionism on the rise. Because it was never free market to begin with. Business no more are institutions for just customer value , economic growth and profitable Bottom line. Business today are part of a bigger vision today to serve interests of Govt, Power , Countries . They act as Tools and chips for Geo-political advantage for re-writing foreign policy and international trade rules.

Trade has become a potent force to integrate, control , coerce , manage or to avert war or wage a war on a nation or its people without use of military or hard power.

Untill the rules of business globally are not re-written we are seeing a new architecture emerge of power, industries , trade and jobs globally.

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