The hell with Tarun Khanna!
Okay, this is unfair, but seriously. My father once talked to him at a conference, by the way.
You must understand that Tarun Khanna does this Emerging Markets talk that I find very tiresome.
So called emerging markets like Russia and Brazil have been ‘emerging’ for a hundred years. They were ‘emerging’ then, they are ‘emerging’ now, and they are forever just ‘emerging’.
I have read Khanna’s articles on emerging markets, and my complaints:
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He admits that most foreign investments go from First World to First World, or Third World to First World; he laments that little goes to Third World. Has he ever considered that there are good reasons why businesses are careful, unwilling, and reluctant in deploying billions of dollars of their own money to these nations? Could it be that this choice has to do with practical realities of business? Is it not inherently a BAD idea to invest in poor countries?
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He admits that immediately available information tells nothing of Third World nations, and more comprehensive research is needed to truly understand them. Does he not realize this is PRECISELY WHY nobody does it? That specific information is scarce? And it is too costly to understand alien cultures - costs that may outweigh benefits?
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He laments that only the upper class, globalised segments of Brazil, Russia, India, and China are targetted by multinationals. Again, are these not the only segments who are easy to reach and sell to? Would it not be expensive to try to analyze their rural markets? Would it not be expensive to try to sell to them?
I am sorry, but reality is more powerful than Harvard Business School theory. There is nothing in this world to break North American/European hegemony. Even now, American investment in Britain is nearly $2 trillion, and in BRICIS combined, way below $2 billion. That’s because even broken Britain is a better investment - because of its cultural, geographical, and demographic advantages. India does not have an aged experienced population largely above 40, like Britain, and is not situated on rivers and coastal harbours that allow quick movement of goods, like Britain, and is not an honest nation, like Britain.
One thing I didn’t understand about him is that he says that the private market has successfully fulfilled the role that the government has failed to or has been unwilling to fulfill. Yet he still calls for democracy and government in those areas, even though the private market has proven that it can successfully provide those and services.
What is wrong with those shantytowns/slums? Just because he thinks that they look ugly they should be removed and replaced with “modern” buildings? Why? He doesn’t understand time preference. The people in those areas have other immediate needs to fulfill than their home decoration or landscaping.
Btw, is true about how India “errors on the side of private property rights” instead of “society’s needs”?
Oh he has repeated that line several times, even the last time my father heard him speak.
He said, “In India, individual interests take precedence. In China, public interests take precedence. Although I don’t say one is good or bad, India is an individualist society and China is a collectivist society.”
I am not sure you can easily generalise 1.17 billion as either individualist or collectivist. It’s all the more stranger, because the Communist Party of India is the ruling party of two Indian states - Bengal and Tamil Nadu. The Communist Party of India (Marxist) has a two dozen seats in the central government legislature, and the Communist Party of India (Maoist) has active supporters in districts with a total of 400 million people. I’d say the collectivist segment is very much there. Either way, India’s earliest prime ministers, Jawaharlal Nehru and Indira Gandhi, were inspired by the ideas of the Fabian Society in Britain, and were also supporters of movements for anti-imperial international socialism, like NAM. I am not sure, but India seems to have a certain strong collectivist tradition, both in its elite and poor.
Anyway, Tarun Khanna’s talk on private sectors resembles what a lot of Indians keep saying. You see, in colonial era tradition, many sectors were public monopoly. The justification given in the colonial era was that everything should be singular and standardised, and anything other a top-down creation of services would “threaten unity of the union”. These dirty habits passed into independent India and bureaucrats complained of “private players prematurely entering essential sectors”, and felt compelled to nationalise banks and energy companies.
It’s a foregone conclusion.