By Nirvikar Singh
The importance of the recent US elections for India cannot be overstated. The political landscape in the US has shifted dramatically. Donald Trump is not just an America-first ideologue, though that has been a part of his thinking for decades. He is also driven completely by self-interest, and is totally transactional in his approach. He is also not someone who respects experts, especially those with scientific expertise. Perhaps these traits are common among autocrats — putting their own interests and egos above all else, with all their relationships and interpretations of the world around them being subordinated to the need to dominate, to be seen as correct in their decisions, and to demand adulation.
How will these traits play out in Trump’s second term? He is already bringing in loyalists who share his personality traits, and who are more extreme than he is, because they carry more ideological baggage than he does. US institutions will weaken further, beyond what happened during Trump’s first term. This weakening will be the result of the attrition or outright removal of expertise and ideals of objectivity, as Trump pursues retribution and personal power. In this kind of situation, some of the worst damage is done by those who achieve power through loyalty, rather than objective qualifications. The US is in for a rough ride in the next four years, and it remains to be seen how permanent the institutional damage will be.
For India, dealing with a Trump administration is likely to be more challenging than the last four years, in which a consistent strategic posture, still in the pursuit of US self-interest, allowed for the possibility of collaborations in areas such as technology and national security. While the Trump administration may be even more hawkish on China, it will also be unpredictable, and even if there are favourable personal equations in play, those can be subject to change. Meanwhile, the layers of bureaucracy that build sustained collaborations in complex areas such as technology and innovation may well be decimated under Trump. In some areas, such as climate change mitigation and adaptation, the US is likely to retreat completely, leaving countries like India having to rely more on Europe and possibly multilateral institutions.
It is possible that US business leaders will still view India as an attractive investment opportunity and as a risk-reducing alternative to China. But there will be no overarching US foreign policy stance behind those private sector perspectives. In any case, if even some of Trump’s plans for tariff walls are carried out, every developing country, indeed, the entire world economy, will be harmed beyond what any bilateral equations might accomplish for India’s economic growth path. A global economy faced with greater uncertainty may also come with higher interest rates, and greater caution among investors. Economies run by autocrats typically enrich a favoured few, but overall growth falls, and its impacts narrow. We have seen Russia and countries in Latin America and Africa go this route, but if the US economy follows this path, the global implications will obviously be much greater.
All of this means that India’s leaders will have to work harder to keep its economy growing at a rate that will bring meaningful improvements in the lives of the bulk of its population. One irony of the US election results is that they came weeks after three economists – Daron Acemoglu, Simon Johnson and James Robinson – were awarded a Nobel prize for their work on the importance of the quality of economic and political institutions in promoting economic development. India’s leaders may want to ponder on the lessons of this work. It is true that the case of India was not the best fit with these theories, and neither was China, for very different reasons. Some of the divergences have to do with size, which complicates treating a country as one unit, or magnifies unique features. But in broad terms, there is an intuitive appeal to an approach which recognises the value of balanced political and economic competition, which is what good institutions ideally promote.
One reason for the rise of Trump and what he represents has been the increasing diversity of the US over time, especially the last few decades, and the greater difficulty of achieving balance, especially in a world of rapid technological and cultural change. The US has absorbed people from all over the world, and the strains of that process have been showing in the rise of Trump and his cohorts. In contrast, India has been diverse for centuries, and its post-independence institutions were designed with that existing diversity in mind, although inevitably with imperfections. Retreating from that situation is very different from the process in the US, or even from European countries that have been handling similar strains.
One factor in the Democratic Party’s loss in the US was supposedly “identity politics.” But this claim is misleading: the Republicans had their own version of identity politics, which simply resonated better with a majority of voters. The real issue is how diverse identities, which have multiple dimensions (race, religion, gender, social class, and so on), are managed in a competitive political system. Evidence and intuition suggest that diversity promotes innovation and entrepreneurship, which contribute to economic growth, if politicians do not exploit the strains of increasing difference or create new strains.
The author is professor of economics, University of California, Santa Cruz.
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