It’s amazing how much governments have suffered setbacks lately in several places. Understandably, incumbency is a burden that governments cannot cast out easily, especially if they have little to show on their balance sheet.
Shinzo Abe’s government in Japan has just thrown down the gauntlet, calling for a snap election less than two years after assuming power under the brand of “Abenomics”, policies largely made up of quantitative easing but going also for market reforms which have been late in the coming.
Polls predict he may still win. His policies changed many things for the better, bringing back inflation in a place plagued by deflation for more than a decade, but once Japan leapt into recession during the second and third quarters of 2014, his critics started claiming ‘Abenomics’ cannot deliver and that he had failed. His government resigned, therefore, ready to face the polls again.
Japan is however one of several examples where politicians don’t appear to be holding out for long. In Italy, Berlusconi had his own sexual escapades and an ambient atmosphere of corruption to pull him out of power. In Brazil, Dilma Roussef was given for lost in the recent elections against a background of claims of inefficiency and rampant corruption but she managed to save herself by a fair margin.
In the elections in India, some five months’ past, the BJP trounced the Congress Party, winning a comfortable majority on its own in the Lower House. By the same token, it dismissed from political power a dynasty that has ruled the country for almost 50 of the 66 years since India’s independence. Voters were fed up with the travails and unpalatable compromises of coalition politics into which Congress had been forced most of the time but also with allegations of corruption against some of the party’s top hats and what observers qualified as ‘policy paralysis’ of a government unable to take decisive action on the social and economic agenda.
The situation in France is even more dramatic. In 2012, voters hooted Nicholas Sarkozy out of power for many reasons but largely for his unproductive extreme rightist policies and an unbeatable personal arrogance. Yet now, unless the courts stand in the way for alleged charges of malfeasance and electoral corruption and his party rivals frustrate him in his new bid to secure the nomination, he stands a good chance of posing as France’s next president, barely two years after Francois Hollande, his successor, defeated him in the last presidential elections. The French are totally disgruntled with the latter who currently finds himself with one of the lowest approval ratings of a French president.
The situation is not far different in Britain. Nigel Farage, leader of the UKIP party, has rapped the knuckles of both David Cameron, the Conservative government leader and Ed Miliband, leader of the Labour Opposition, by going for populist measures, including the claim that the two leaders are distanced from the population except when elections are at the doorstep, fighting against liberal immigration policies and favours accorded to the super-rich by the government, and preventing Europe from taking over the sovereignty of the state. The leaders of Britain’s two major parties have been forced to recognize the changing voter tide ushered in by Farage’s discourse, which carries the risk of sweeping off at least one of the two from power some time now.
Politicians not doing what it takes to get things right
Similarly, in Europe, it is claimed that prospects have become gloomy because its politicians are not doing what it takes to get things right. It is thus being said that the EU is lacking in the required “solidarity” (by way of not giving farm subsidies enough, not propping up “favoured” firms, not making transfers from rich to less rich countries of the EU, failing to introduce a dose of protectionism against global competitors, and not effectively preventing immigrants from crowding in). Voters are therefore moving to separatist far right parties.
One of the most telling stories about the unfurling tide against incumbent politicians comes from America. The early November midterm American elections gave control of both the Senate and the House of Representatives to the Republican Party, now pitched in straight fight against the Democratic President who has two more years to complete his second and final term. The Republican win was centred upon projecting hatred during the past 6 years against President Barack Obama for all and everything he undertook and stood for in the eyes of Republican radicals, including perhaps also his skin tone, but it also rested to an extent on gerrymandering of constituencies. There will be blood, no doubt, in this confrontation with the Republicans denouncing Democratic policies such as reining in environmental impacts of coal, gay rights, gun control and the President’s healthcare scheme, all of which have come under attack.
But will dealing with issues such as these produce the industrial policies, innovations, structural changes and other policy initiatives required to edge up the US growth rate (currently +2.2%) or to bring further down the unemployment rate (currently 5.8%)? The answer evidently is ‘No’. The same is true for the other places across the world where governments have been or are being brought down for conjectural discontents with leaders trifling with serious issues in hard times. Instead of focussing on fundamental failures of leaders to address real issues, people have been led into looking for superficial reasons why they should be thrown out. The real reason for rejection of political leadership everywhere is the persistent depressed state of global economic growth. The remedy has to be looked for in the bigger context in which the world has been finding itself for the last so many years.
At the Annual Dinner for Economic Operators hosted Monday last by the Bank of Mauritius (BoM), there was a sober tone about chances of immediate improvement of global economic prospects. The speeches of both Governors Rundheersing Bheenick of the BoM and Raghuram Rajan of the Reserve Bank of India underscored the slow pace of global economic growth. Both felt that there was no indication that sustained growth, when it comes, will pick up at the high rates experienced during the pre-crisis years, i.e., it would be far slower paced than before. Things fall in place better by taking a longer term perspective, it was said, planting the seeds of future growth now in terms of overhauling the economic structure, imparting relevant good education, creating the right resources and infrastructure, and getting on with a certain amount of preparedness to take up emerging challenges.
They stated that the current slowdown of growth in different parts of the world – let alone its persistent sharply inequitable distribution between the super-rich and the have-nots – might well be part of a much longer cycle having begun several decades earlier with serial ups and downs so far. Predicting, therefore, when and through which mix of policies exactly will a firm and sustained turnaround from the current depressing state of affairs come up, is a difficult matter.
All-round economic growth
Until the turnaround sets in firmly, individual governments will have to battle it hard to keep each country’s head above water, but not by bringing non-issues to the table. This is especially the need in the highly interconnected world of today in which errant policies adopted in one part of the global economy neutralize the positive effects of early green shoots of economic growth sprouting up in other parts.
Being an outward-oriented economy, Mauritius can grow faster when all-round economic growth resumes in key global economies. But we cannot wait for that to happen, keeping our hands down.
Nor should we focus, out of misguided political perceptions, on the kind of trivial focus plaguing politics in so many countries to the detriment of core policies which can potentially ease the situation. So strong is the focus on individuals, who are sought to be brought down, that not many are prepared to admit that it is not the political opponents’ folly that is wreaking all this havoc but rather the operation of global forces keeping depressed overall economic growth at the global level. The world is lacking the economic leader who can raise the tide.
There is no going back from the great economic interdependencies that have come into place on the planet, tying up our fates together. Countries adopting innovative new ideas and domestic policies will be the first to come out from the current stranglehold of unsatisfactory economic performance, much earlier than others. The best thing for us would be that we should be seen not to be tinkering only at the edges, focussing on petty non-issues, when the priority has long been to give the long-term reorientation the economy has been waiting for since quite some time now. Or, do political leaders think we can still afford the luxury to keep discussing about matters that will not have even an iota of influence towards raising our GDP?
* Published in print edition on 21 November 2014