D. Dowd Muska


The Eagle and the Tiger, BFFs?

December 13, 2012

America’s relationship with India exemplifies the kind of immeasurably impactful story that the legacy media are too lazy -- or too myopic -- to cover.

So kudos to the Cato Institute’s Swaminathan S. Anklesaria Aiyar for penning a survey of one of the most significant, if inexcusably overlooked, developments of the last half-century.

“India and the United States: How Individuals and Corporations Have Driven Indo-U.S. Relations” is a quick read. But it’s stuffed with data and anecdotes that explain how two behemoths that once eyed each other warily now cooperate in multiple win-win arrangements. Aiyar, an economist with Cato’s Center for Global Liberty and Prosperity, avers that the relationship has “been driven substantially by exchanges between individuals and corporations -- not just diplomats or politicians -- for six decades. The nations’ two governments have, by and large, simply been catching up in the last two decades.”

During the Cold War, India’s coziness with the Kremlin didn’t win it many friends in D.C. But in 1991, the Soviet Union imploded. Compounding the loss of a pseudo-patron, New Delhi was struggling to fix an economic crisis. Decades of socialism and autarky had produced slow growth and a foreign-currency crunch.

A new path was needed, and while progress came incrementally, the country began to privatize and embrace free trade. Growth accelerated at a pace that nearly hit double digits. Today, India has an economy bigger than South Korea’s. The GDPs of Australia and Russia have slipped behind the roaring tiger, too. Barring wars, natural disasters, or a return to boneheaded policymaking, Hindustan will soon join Europe, the U.S., China, Brazil, and Japan in the sextet of the planet’s mightiest economies.

Business with the Yanks plays a major role in India’s boom. Between 1986 and 2011, imports of goods from America, adjusted for inflation, expanded from $3.2 billion to $21.5 billion. Exports grew a bit faster, from $4.7 billion to $36.2 billion. In 2011, the nations traded $28.5 billion worth of services. (The market was nonexistent in 1991.) As India’s middle class flourishes, demand for U.S.-origin products and brainpower is sure to rise.

Immigration is a major catalyst of the trade explosion. Indians began to flee to The Land of the Free when LBJ approved the abandonment of country-of-origin immigration restrictions. And when Margaret Thatcher cut off subsidies for Commonwealth subjects seeking higher education in the United Kingdom, schools across the pond became popular. By 2010, Aiyar writes, “more than 100,000 Indians entered U.S. universities, overtaking China as the largest supplier of foreign students.”

Come for the learning, stay for the opportunities. In an analysis issued earlier this year, the Census Bureau found that Indian Americans (either “pure” or combined with other races/ethnicities) number 3.2 million. Among residents of Asian ancestry, only the Chinese and Filipino populations are bulkier. Aiyar notes that the last ten years saw Indian Americans launch “more new high-tech firms than immigrants from the UK, China, Taiwan, and Japan combined.” In addition to Silicon Valley, many Indians “occupy important positions in academia [and on] Wall Street.”

An unintended legacy of the British Raj aided assimilation: “Indians seeking to study in or migrate to the United States found that, having English language skills, they could communicate well with Americans, who were also more welcoming of immigrants than any other country.” (Back home, India will eventually become “the biggest English-speaking country in the world.”)

By 2005, it was obvious -- even to George W. Bush -- that Indians were a wealthy and influential presence in the U.S. Furthermore, their motherland was blossoming into a superpower. The 43rd president pushed to end sanctions imposed due to India’s eschewment the Non-Proliferation Treaty. (“Ally” Israel is another nonsignatory.) The move incensed both megalomaniacal neocons and aggressive-multilateralism moonbats, but Congress, eager to help nuclear manufacturers secure a new export market, agreed. Bush’s successor continues the comity -- in 2010, President Obama endorsed New Delhi’s desire to join the United Nations Security Council.

As for the future, the flow of goods and services will intensify, as will productivity-boosting swaps of management practices and business know-how. Both Indian-American governors are potential players in the next presidential race, and Ami Bera will serve in Congress come January. India-based multinationals currently employ tens of thousands in the U.S., and it won’t be long before the figure rises into the hundreds of thousands, if not the millions.

India could prove to be America’s closest companion in the 21st century. As Aiyar makes clear, people and profits -- not government -- built the bond.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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