Is our distaste for Bush misplaced?

On November 3, the White House turned red once more.

When the men, and women, in blue were finally convinced that George W Bush was going to reoccupy the most powerful chair in the world, a chunk of the deeply divided America groaned loudly. Joining them in their crib was, apparently, the rest of the world.

While the officialdoms of the world turned busy sending in the usual congratulatory messages to the White House, the plain vanilla world, including a number of Indians, were left wringing their hands as to how the Americans could be so stupid.

Whether stupid or otherwise is a matter of perception. But what is a legitimate point of debate is why did it knock the wind out of so many Indians?

What will Bush II mean for India

True that Bush Jr went where his father didn't. True the Texan reinforced once more that the principles of the Roosevelt doctrine would be the cornerstone of US foreign policy by barging into Iraq and ousting Saddam. True the gung-ho attitude typified by Bush fitted the stereotype of the boorish American to a T. True the American president's WMDs turned out to be Weapons of Mass Deception. True his actions have been responsible for the deaths of at least 200,000 Iraqis and close to 4,000 US soldiers. And true again that Bush -- more than anyone else -- dealt a body blow to the concept of internationalism that was the foundation of the post-second World War world order.

It is understandable that Americans had to compare the actions of Bush with the proposed actions of his Democratic challenger John Kerry. After all it was their democratic right. It is also equally understandable that the rest of the world, including Indians, closely followed the American elections. After all, the world's sole superpower can and does influence the policies of nations.

An era where self-interest is the new existential reality and pragmatism is the name of the game, the distaste that Bush evokes in many Indians needs to be tempered with facts. For Bush-haters, John Kerry was to be the deliverance. Kerry might have been the balm for Iraq, which is fast becoming a second Vietnam, or the right man for those advocating stricter environment protocols.

US policy towards India won't change

But would he have been the right choice for India? More precisely, would he have been a friend of the new India that is riding on the tidal wave of Business Process Outsourcing (BPO)?

Unlikely.

In several campaign speeches John Kerry's focal point was how the American people are being rendered jobless by outsourcing. In Indiana, he barely masked his support for the protest in the early part of 2004 that prompted the state to cancel a $15 million IT contract with Tata Consultancy Services. His aides did not tire of reeling out 'dire straits' statistics compiled by the US Bureau of Labour Statistics.

Statistics, as the cliché goes, tells only a part of the story. The aides were on the button when they said the jobless rate among US software engineers had more than doubled to 4.6 per cent in three years and the rate was 6.7 per cent for electrical engineers and 7.7 per cent for network administrators. They were also right when they said that 234,000 IT professionals were unemployed.

What the Kerry camp failed to mention that almost 80 per cent of the US software engineers squeezed out by Indian brains got alternative jobs with more than 36 per cent bagging a higher pay. Quite obviously the Kerry camp saw political capital in tarring outsourcing as the cause of jobless, when the cause was closer home. The US economy grew slowly at 3.7 per cent annual rate in the third quarter of 2004, not as strong as many analysts expected. Outsourcing turned out to be a convenient whipping boy for explaining joblessness.

What the Kerry camp failed to acknowledge was that the logic of free trade and open borders that made the US an economic giant is also turning India into the world's second-fastest-growing economy. A report by Forrester Research estimates that within four years IT outsourcing will be a $57 billion annual industry responsible for 7 per cent of India's GDP and employing some 4 million people. The Kerry camp extensively used the findings of the report.

For a majority of the people who live on monthly salaries, $57 billion might appear to be a lot of money. But what the report failed to mention is that $57 billion is just 0.5% of the American GDP. That makes the American GDP worth $54.4 trillion.  Compared with such a figure the Indian IT industry's earning will just be a drop in the vast pool of American dollars. 

Kerry's campaign also stoked the fears of the average American. The one point that was constantly hammered through the consciousness of the US voters was that outsourcing was stealing their jobs. Call centres was the prime target. A good one at that, since the average American is not a geeky software engineer or a PhD in artificial intelligence. An average American could relate to the flawed, but devastating, logic of young Indians putting in late nights, putting on accents and catering to Americans at a fraction of the original cost.

The perception created was one of invasion, where hardworking Indians would swamp the labour market elbowing out Americans and threatening their ways of life.

To be fair, it must be admitted that the US administration's broader policy towards its economy, irrespective of who is in power, has always tended toward some degree of protectionism when faced with a foreign challenge. It was the preferred policy option in the 1980s when the Japanese automobile industry was outpacing their US counterpart by some distance. Protectionism was again in evidence when Indian textile imports were giving US brands a run for their money. South Korea and China learnt the hard way what happens when their steel exports 'hurt' the US economy. 

But contrary to the general perception -- reinforced by the Kerry campaign -- that Indian companies are used by US giants for low-quality 'janitorial' services, of the 70 companies that have earned a Level 5 rating from Carnegie Mellon's Software Engineering Institute, half are from India. Level 5, by the way, is the highest international standard a software company can attain.

While call centre operations do constitute a chunk of the BPO business in India, there are other operations -- which are necessarily high technology -- that do not receive the same kind of publicity. For obvious reasons they did not receive any at all in the Kerry campaign.

For instance, why did Kerry not inform the American public that General Electric's laboratory in Bangalore -- Jack F Welch Technology Centre -- employs 1,800 engineers, out of which a quarter of them are PhDs?  What's more, since the centre was set up in 2000, Indian engineers have filed for 95 patents. That is close to 25 patents a year; an astounding two patents a month!

The US election is over. Now what?

George W Bush in contrast came out strongly in support of outsourcing and was steadfast in his support throughout the campaign. In fact the head of the Bush's Council of Economic Advisers, N Gregory Mankiw, said, 'Outsourcing is just a new way of doing international trade, which makes it a good thing.' The comment, obviously, led to a huge uproar. But to the credit of Bush, he did not fail for short-term political gain of scapegoating foreigners for domestic ills.

So does that mean that Republicans in general are better for India, at least in the economic sphere? One cannot conclusively say that considering that the American policies in general, foreign and economic in particular, usually follow the path of self-interest. But the following piece of information may give you an indication.

As of January 2004, there were 186 bills aimed at curbing outsourcing pending in the US Congress and 40 state legislatures. One of the bills was passed on April 8, 2004. Called the SAFE ID Act, the piece of legislation has the potential to wreck havoc on the burgeoning financial services outsourcing industry (A T Kearney Consultancy forecasts that by 2008, 500,000 financial services jobs will be outsourced). The SAFE ID Act requires businesses to notify US consumers before sending personal information overseas and gives the US government the power to bar companies denying service or charging a higher price if customers balk.

And pray, who is the architect of the act?

A person who goes by the name of Hillary Rodham Clinton.