On 20th of January, 2009, when Barack Obama was sworn in as the 44th President of United States of America, delivering one of the most outstanding speeches ever, many would have thought it to be a tokenism, as reversing the economic fortune of the current order is easier said than done. Only time would perhaps prove how much he would succeed eventually. But if one has to go by the precedence being set on each passing day, Obama is perhaps not just on the right track, but is also indicating why he is the only person who deserved to be there in these times. By announcing his intentions in clear cut terms of curbing the salaries of top executives of companies to a ‘maximum’ of $500,000, which have been seeking bailout packages from the US government to remain afloat (under the Troubled Asset Relief Program), Obama has made it clear that the much needed change of fortune of the US would not happen unless the highly skewed income disparity is arrested and the culture of carrying on with obscene extravaganza by a select few executives, even in the worst of times, is kept under leash.
And certainly, this decision is not protocol driven but one which is driven by a vision to put the house in order, which has been completely ruined by his predecessor. It is a fact that a certain George Bush, brought up in relative opulence, could never really realise these trivial details; but an Obama would know how it feels to have responsibilities of a family, car loan, housing loan, children’s education and every other liability, when one loses a job. That’s the difference in thought that emanates from a grassroots leader. For the past six months or so, the saga of the average American losing jobs – like the falling of ninepins – has become synonymous with business news. And the real culprits responsible for all of it are none others than the highest paid executives in some of the most overhyped corporations of the US. With their rubbishing aside of every economic and business theory in their unending stupid acts in the name of innovation and market expansion, these US companies not only put to risk the American fortune, but also each and every country having an economy worth talking about. Today, when an average lower-middle-class Indian suddenly loses his job for no fault of his or his own performance, his loss of job has much to do with the irresponsible acts of some high profile, highly educated, jet setting and techno-savvy executives in US. And yet, when the whole world is suffering because of such irresponsible acts, when – after having burnt fingers with stupid experiments related to market expansions without proper studies – they are surviving on tenterhooks with the taxpayers’ money given to them as lifeline, it is nothing less than blasphemy if even now they continue to draw millions of dollars as salaries, in addition to the innumerable perks and freebies. For the uninitiated, this is how the situation is: In the last quarter, the loss of Merrill Lynch was $9.8 billion; but its CEO was rewarded perhaps for this incredible performance with an annual compensation of a whopping $83 million! The compensation of John Mack of Morgan Stanley for 2008 was $41 million. This, at a time when Morgan Stanley had to write-off losses and loans to the extent of $3.6 billion and $9.8 billion respectively.
Things like this are not unique to US alone. Not to the extent of billions of dollars, but in India too this tradition continues whereby it is difficult to find a bankrupt promoter even when the companies have filed for bankruptcy. But then, unlike in the US, in India it is difficult to even imagine of a statesman of the stature of Obama to bring in a policy like that. No wonder, as a President, Obama has been receiving considerable amounts of flak from the media for his socialist mindset; but then, it is no secret that such a mindset is the need of the hour if the American economy has to be restored to normalcy. What is worth learning here is the assertion with which Obama is putting a more socialistic outlook to practice, particularly with respect to corporations which need the Federal bailout. Contrast this with any Indian Prime Minister, who would at best make a similar feeble request in some obscure forum, wherein nothing actionable would happen other than a few nodding of heads. Take the case of Indian PSUs, a classic example of the Indian version of ‘actionable socialism’! Not only are many of them loss-making even now, even those who are making profits have – some or the other time in the past – been bailed out by the government with taxpayers’ money and without any strings attached!! Yet, many of those PSUs are still run like personal fiefdoms of Ministers; and their top executives are treated like demigods with freebies being doled out in a manner as if each of them has been making it to the Fortune 500 list since decades!! At a time when most of the steel companies across the world are reeling under recession, when the future is looking bleak in many a respect, thanks to Mr. Ram Vilas Paswan – with his eyes firmly on the ensuing elections – SAIL is doling out gold coins to its employees, a move which would cost the company a huge Rs.140 crores, even when the profitability of the company has come down by a massive 56% in the last quarter! But thanks to the kind of socialism that India still wears, such acts would be considered benevolent deeds.
One can safely presume that many of those who presumptively thought that the recovery act of Obama would either be glib talking or a cake walk for the rich Americans, are now realizing that even the rich and the mighty, who have made it a habit of passing off the buck to the salaried employees in terms of cost-cutting, would have to face the hard points. Today, President Obama has made it clear that no one can take tax payers’ money for granted! Like it or hate it, it is the only recourse for the United States of America!! And this could very well be the recourse for the rest of the world as well!!
- 12 February 2009 |
- Dr. Arindam on Indian Economy